Louth v Diprose

[1992] HCATrans 102

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No AB of 1991

B e t w e e n -

CAROL MARY LOUTH

Appellant

and

LOUIS DONALD DIPROSE

Respondent

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

GAUDRON J

McHUGH J

Louth(2) 1 8/4/92

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 8 APRIL 1992, AT 11.54 AM

Copyright in the High Court of Australia

MR R.D. LAWSON, QC:  May it please the Court, I appear with

my learned friend, MR E.M. AUJARD, for the

appellant. (instructed by Lempriere Abbott McLeod)

MR D.M.J. BENNETT, QC:  May it please the Court, I appear

with my learned friend, MR B.F. BEAZLEY, for the

respondent. (instructed by Daenke O'Donovan)

MASON CJ:	Mr Lawson.
MR LAWSON:	If the Court please, I have an outline of the

submission for the appellant, together with a

chronology derived from the evidence which I hand

up.	The appellant was the defendant in this
action.	The trial judge held that the defendant's

acceptance and retention of the gift of a house was

unconscionable and was prepared to hold also that

the procuring of that gift was by undue influence.

The Full Court, by a majority, dismissed the

defendant's appeal from that judgment. The

Full Court held that the defendant's acceptance of the gift was unconscionable.

The Full Court, as had the trial judge, took

the law to be that as formulated by Justice Mason

in Amadio. It is our submission that in focussing

on Justice Mason's formulation, the courts below

paid insufficient regard to the requirement to determine the degree of equality or inequality between the plaintiff and the defendant; a point

which had been emphasized by Justice Deane in

Amadio at pages 476 to 477.

It is our submission that the trial judge and

the majority of the Full Court, which adopted the trial judge's approach, erred in focussing on the

plaintiff's weaknesses which were said to have

arisen from his emotional attachment or emotional

dependence which had been wrought by his

infatuation and the defendant's supposed

manipulation of that infatuation and attachment.

It is our submission that on the whole of the

evidence properly viewed, the plaintiff was not the

weaker party. In this transaction there was a

reasonable degree of equality, to use the

expression used by Justice Deane at page 474 in

Amadio.

It is our submission that the courts below

erred in examining the transaction from a point of

view that was too clearly aligned to that of the

plaintiff. That perspective is reflected in a

number of expressions used by the trial judge:
expressions such as "unrequited love", "pathetic
devotion", "utter infatuation", "feeding the flames
of the plaintiff's passion", "bizarre behaviour"

and as the Acting Chief Justice presiding in the

Louth(2) 2 8/4/92

Full Court used the expression, he was "enslaved"

by his emotional dependence.

It is our submission that in adopting that

approach, the judges were in effect looking at the

situation from the plaintiff's perspective rather

than from the perspective of both the plaintiff and

defendant, that when one looks at the situation

from the defendant's perspective, somewhat

different expressions might be used.

It is appropriate to start with a

consideration of the facts as found by the trial

judge and the inferences that were drawn by him.

The Full Court accepted those facts and the
majority drew the same inferences. At page 302 of

the appeal book, the judgment of Chief Justice King

commences. We accept of course, as we must,

His Honour's findings on the primary facts.

His Honour's consideration of those facts and

findings begin at page 302, about the middle of the

page, and continue for a number of pages

thereafter.

There are only a small number of matters to

which I would refer in passing, and I will not take

the Court through the facts because they are very

clearly set out. At page 304, at about line 10,

His Honour said:

According to the plaintiff, whose evidence I

accept on this point -

the defendant said to the plaintiff on an occasion

in 1983 - this is a couple of years before the

impugned transaction which occurred in May of

1985 -

the defendant responded "Oh well, if you don't

try and hassle me I would probably let you

sleep with me occasionally but I don't want

any commitment".

This statement might suggest on the part of the

defendant a rather calculating attitude, an

attitude that the Chief Justice obviousl¥

considered she did have by reason of his ultimate
conclusions that she had manipulated a certain

situation. But that statement at line 13, "I don't

want any commitment" and "I would probably let you

sleep with me occasionally", should be seen against

the plaintiff's own explanation at page 84 of the

transcript, line 11, where he said that was really

a light-hearted comment and one upon which he did

not place any great reliance.

Louth(2) 3 8/4/92

At page 305 the Chief Justice, at the very top

of the page, refers to the defendant's history of

mental instability. At about line 6 he refers to a

shoplifting incident, an incident in which the

defendant had been apprehended for shoplifting.

His Honour suggested that was in July of 1983. In

fact it was a year later, as appears from the

exhibit P2, at page 249. That is a letter which

the plaintiff wrote to the prosecuting authorities,

together with psychiatric reports.

At the bottom of that page where His Honour is

describing the separation in September 1984 of the

Volkhardts - Mr Volkhardt was the brother-in-law of

the defendant and it was he who owned the house in

Tranmere that was ultimately given by the plaintiff

to the defendant. About five lines from the bottom

His Honour says shortly after that separation in

September 1984 a conversation took place. It was a

month or two, according to Volkhardt's evidence at

page 217 line 21. There may be some significance

in that to which I will refer a little later.

If I might next take the Court to

page 307 - perhaps I should, to put this matter in

context, refer to page 306 at which in the very

beginning His Honour describes here in brief

outline the discussions that took place between the

plaintiff and the defendant concerning the

acquisition of the house at Tranmere, the house

that was the subject of this action. His Honour

returns to that matter later in the reasons and I
will return to it there. But after that

transaction, as appears on page 307, the

relationship between the plaintiff and the

defendant continued.

In 1986, for example, about five lines in, he

made a will in which the defendant was a joint

executor with his mother, and he bequeathed an

aeroplane to the defendant's son. Prior to that

time, I should insert, about three months after the

settlement of the house transaction which occurred
in June 1985, he delivered the certificate of title

for the property to her, a fact upon which some

reliance is placed because it is our case that what

was described by the Chief Justice as an atmosphere

of crisis does not, in fact, describe a particular
incident but a number of events over quite a period

of time during which time no immediate crisis could

be said to have been generated.

In the middle of page 307 at about line 15 the

Chief Justice refers to a letter written by the plaintiff to the defendant in which he outlined the

terms of his will. That letter is exhibit D14 and

appears at page 283 to 284 of the appeal book.

Louth(2) 8/4/92

What the Chief Justice does not mention, and what we would submit in passing, is the fact that the letter suggests to the defendant that she should

remain silent about the testamentary provisions he has made because he has not told his sister or his mother of them.

Further down, on page 307, at about line 21,

there is a reference to a letter of 13 June 1986.

The only point about that letter, which is exhibit

D15, beginning at 285, is that there, in 1986, the plaintiff, who is still on friendly terms with the

defendant, is offering to pay certain legal costs

for her and is, as it were, behind her back,

befriending her, where he suggests that an
application for legal aid might be made on her
behalf but that if that application is not

successful, he will pay.

At page 308, the first six lines, the judgment

refers to the fact that:

The defendants children -

two children -

were transferred from a State school to

fee-paying schools at the plaintiff's expense.

That was at the beginning of 1986 for one child,

and the other in 1987, which appears at

page 66 point 8. I might interpose here as well, the Chief Justice does not mention it, that there

was an ongoing close relationship between the

plaintiff and his children and the children of the
defendant. Although they were living at separate
addresses, the defendant's children from time to
time went to the plaintiff's residence and stayed

overnight. These events are described at 47.10 and

64.30. This is a fact which shows a degree of

mutuality in the relationship which does not really

emerge from the reasons of the trial judge.

At the bottom of page 308, His Honour

commences his analysis of the conversations which

led to the purchase of the house property with the

plaintiff's money. There were a number of

discussions, though the evidence of the plaintiff

and the defendant on them was not altogether ad

idem. The Chief Justice preferred the plaintiff's

account where it differed from that of the

defendant.

At the bottom of page 309, the Chief Justice refers to the conversation, set out at the top of

page 310, and which appears at page 54 of the

transcript, in which the defendant outlined her

Louth(2) 8/4/92

dreadful life, the difficulties that she had had,

and in which she said if the house -

was taken away from h~r, that she would have

to go and live somewhere, move again which she

didn't want to do. She said she didn't think

she could face the prospect and she said,

'Look, if it comes to that, I'll just kill

myself. I'll make a good job of it this

time'.

A conversation upon which the trial judge and the

Full Court placed considerable reliance:

But the way she spoke about it, I had no doubt

that she may well do it and certainly try.

At page 312 the Chief Justice, in his

consideration of the evidence given by various
witnesses, spoke in the middle of the page at
line 15 of Mr Volkhardt as an honest and accurate
witness, and His Honour rejects the evidence of the

plaintiff where that is in conflict with

Volkhardt's. His Honour, at the bottom of that

page, about four lines from the bottom, outlines

one of the conversations that Volkhardt had with

the plaintiff at about the time of the relevant

transaction:

He said that the plaintiff told him that he

loved the defendant but that he accepted that

she was not going to accept him. The

plaintiff told Volkhardt that he was buying

the house for the defendant because he wanted

her to be happy and secure. Volkhardt had a

conversation with the plaintiff in about

August 1988 -

that is another conversation, and it is in August

1988 that the parties fall out and the plaintiff

requests that the house be conveyed to him. That

conversation is relevant for present purposes. But

in my submission, the evidence of Volkhardt, which

appears at page 217 to 219 of the first volume of

the appeal book, is of great significance because

the trial judge accepted it as that of an honest

and accurate witness. It is, in my submission, the

best evidence of the state of mind at the relevant

time of the plaintiff. At page 217, line 19 - this

is after Volkhardt has said that he and his wife

separated at the end of September 1984. He said a

month or two after, he had a conversation with the

defendant, that is Mary Louth.

A. I said that maybe she should be paying

more rent -

Louth(2) 6 8/4/92

for the property -

or maybe it would be a good idea to put her

name down on the housing list -

that is the list of the housing trust, public

housing authority in South Australia -

because she couldn't assume she would live

there forever.

Q. Did you have a conversation with Mary in

about May of the following year, in relation

to some discussions that she had had with

Louis -

that is the plaintiff.

A. Yes.

He was contacted by Diprose. At line 36:

A. Well, he said that he wanted to purchase

the house for Mary.

Over the page:

A. I was taken aback. Very surprised that he would be doing this, and wanted to have

further discussion with him about it.

At line 13:

In the telephone conversation subsequent to

that, I felt it should be discussed more fully

and I invited him to my place to discuss it

fully.

He came to his place. At line 20:

A. Well, the main thing I said, other than

still being very surprised that he was going

to do such a thing, the other thing that I was

very concerned about and pursued again and again was the fact that if he was going to give the house to Mary that I wasn't going to

stand in the way of something that was between

two adults, but provided that I was left in no

doubt that he wasn't going to use this as some

leverage against Mary in the future.

Q. What did he say to you.

A. Well, he said basically that he had

accepted the fact that Mary wasn't going to
accept him. That he accepted the fact that

there was no relationship for them in the

future and that even though he still loved

Louth(2) 8/4/92

her, he had accepted that they would never be

married.

And then on the following page, line 2, in connection with the basis upon which he was buying

it:

A. Yes, that was made quite clear. That he

wanted Mary to be happy.	He wanted her to be
secure.	She had been through a lot of, as we

are all aware, a lot of stress and problems.

He wanted to help her and he felt that he

could do that, he could afford to. He could

buy the house for her, it would be hers. It

was a security. He put a lot of emphasis on

the fact that she would feel secure having her
own place and being able to live in her own

place.

He says, at line 16, they spent about:

an hour, roughly.

Q. You were attempting to sell the house at

that time.

A. No.

Q. Did you have any intention in relation to

it. What were you going to do long term.

A. No great intention, although the assumption
was, I guess, that eventually it would be good

if it could be sold, sometime. Certainly

there was no great pressure to sell.

Now, this is a conversation that is said to have

taken place in or about May 1985. In the following

month a contract was prepared and transfer was

prepared, applications were made for certain

assistance and the transaction was entered into and

completed. The Chief Justice found that the

defendant had manufactured an atmosphere of crisis,

and deliberately manufactured an atmosphere of

crisis for the purpose of procuring the benefit for

her. That appears at His Honour's judgment at

page 319, at line 15:

I find that the defendant manufactured an atmosphere of crisis with respect to the house

when none really existed. There was no

pressure upon her with respect to the house as

the evidence of Volkhardt and her sister make

clear, but she knew that ultimately she would

have to go into a Housing Trust home to enable

the house to be sold.

Louth(2) 8/4/92

Now, we dispute the inference, or the conclusion

which the Chief Justice draws about the

manufacturing of an atmosphere of crisis.

The plaintiff's own account of the various discussions that he had had with the defendant

appears at page 48 to 54 of the transcript and it

is our submission that that evidence does not

suggest an atmosphere of crisis, and that the

inference drawn or the conclusion drawn that there

was a crisis, let alone one that was manufactured,

is, on our submission, not open.

The plaintiff said, at page 48, line 24, that:

A. About May of 1985. She telephoned ..... She

sounded quite upset. She said that she had been told by her brother in law, Arch, that

her sister Sarah was seeking a property

settlement ..... the house ..... would have to be

sold.

At the bottom of the page, she said:

she was going to have nowhere to live and she

was feeling depressed about it and I suggested

I go around and see her and talk to her.

This was by no means an uncommon occurrence

because the parties were in fairly regular

communication, as appears from the chronology that

I handed up. He arrives - line 8:

She seemed quite morose. She told me again

that Sarah was seeking property settlement and

the house was going to have to be sold and she

said she would have nowhere to live and that

she didn't know what she was going to do ....

I asked her whether her family couldn't help

her -

line 19: 

She said she didn't know but she thought they

would not be able to. At that stage, that is

as far as it went that night. Again, she

seemed fairly upset so we ended up talking

about other things, as we usually did .....

She seemed to cheer up.

He saw her two or three days later:

On that occasion the question of her moving

out of the house was discussed -

Louth(2) 9 8/4/92

She mentioned that the house was being sold and she

would have to move.	She said her family would not
be able to help:

I suggested that if her parents and her
brother helped her that she might also be able

to obtain a small loan ..... at the same time -

this is line 4 on page 50 -

I told her that I had some mortgage monies

which were due to be paid -

This is the first occasion on which this is,

according to the plaintiff's evidence and the

defendant's also, made known to the defendant -

I had some mortgage monies which were due to

be paid out at the end of June ...... I

suggested that perhaps if she couldn't raise

money anywhere else that if Arch didn't want

too much for the house and if it was
reasonable that I might be able to lend her

the money.

DEANE J:  Mr Lawson, on the finding that the defendant

created an atmosphere of crisis and so on, you are

faced with concurrent findings of fact, are you

not?

MR LAWSON: It is our submission that the - I think there

are two elements to that, Your Honour. The first

is, what was the crisis and was it a persisting

crisis - - -

DEANE J: Except I notice the Full Court quoted His Honour's

findings about the creation of the atmosphere of

crisis and specifically affirmed it.

MR LAWSON:  It is our submission that if one examines the

plaintiff's evidence, he does not say that he was

moved by any crisis or that that was the reason why

he made the gift that he did.	He gives a
completely different account.

DEANE J:  I can understand your attack on it before the

Full Court. I was just trying to understand on

what basis you say this Court should overturn

concurrent findings as distinct from arguing what

is involved in the concurrent findings.

MR LAWSON: Well, we firstly seek to, as it were, have this

Court draw a different inference, or come to a

different conclusion about the nature of the

crisis, and what is important, in our submission,

is what was the plaintiff's response to that

crisis. Did he make the gift in response to the

Louth(2) 10 8/4/92

crisis or did he made the gift for the reasons that

he himself gave?

MASON CJ:  I thought your first point was there was no

evidence to support the finding of crisis.

MR LAWSON:  I did not intend to put the submission in that

way. The point we wish to make is that the

conclusion of a deliberately manufactured crisis is

a conclusion which the Court should not draw.

BRENNAN J:  The statement attributed to the appellant at the

bottom of 49:

the house is being sold and she would have to

move -

is that a statement of the position as it then was,

in fact?

MR LAWSON:  The position then, in fact, was that she would

ultimately have to move and Mr Volkardt had

suggested that she would ultimately have to move.

He had said that there was no pressure upon her to

move.

BRENNAN J:  The statement is that:

the house is being sold -

was that true?

MR LAWSON:  It was not true, and it was not true to the

knowledge of the plaintiff because the plaintiff

went to see Volkardt and he asked if the property
was on the market, and Volkardt said that it was

not on the market, Volkardt disabused him of that

view, so that - - -

BRENNAN J:	Where does one find that?
MR LAWSON: That is, at the passage at 219, it is my

submission, the effect of that evidence, and it is

also clear - - -

BRENNAN J:	Where at page 219?
MR LAWSON:	In relation to this discussion, line 19, where

Volkardt says he did not have any intention - he

was not attempting to sell the house at that time.

BRENNAN J: But he does not say he said that to Mr Diprose.

MR LAWSON:  No. The inference from the evidence must be

that Diprose was aware that the house was not on
the market, in a passage that I am just coming to,

because an agent has to be sent out to have a look

Louth(2) 11 8/4/92

at the house for the purpose of determining the

price after Diprose says he would be interested in
buying it. It is not as if the house was on the

market. It is, "Would he sell it?".

TOOHEY J:  I did not understand your answer to

Justice Brennan in relation to the participants to

the conversation, Mr Lawson. This was a

conversation, was it not, between Mr Volkardt and

the plaintiff.

MR LAWSON:	Yes, and not in the presence of the defendant.
TOOHEY J:	No, but as I understand your proposition, it is

that whatever the defendant may have said to the

plaintiff about the possible sale of the house, the

plaintiff knew from Volkardt what the true position

was.

MR LAWSON:  Namely, that the house was not being - - -

TOOHEY J: That there was no urgency about the sale of the

house.

MR LAWSON:  Yes, that it was not being sold from under her,

as it were.

BRENNAN J: That is my problem. I do not see what evidence

you are pointing to to demonstrate that.	Is it the
passage on page 219 at line 21?

MR LAWSON:	In the plaintiff's own account of the various conversations he had - this is between 48 and
54 - - -

BRENNAN J:  The relevant passage is page 49 line 31, The

question is: did she tell him what she knew to be

a lie and did he then act in response to that

advice?

MR LAWSON:  At page 53, line 7 is the passage that I had in

mind in answer to Your Honour's earlier questions:

A. Well, the next discussion with the

defendant was after I spoke to Arch.

Q. What did you say to her?

A. I told her that Arch said he was prepared

to sell the house. There were other things

that Arch said to me that I didn't tell her.

I told her that Arch said he would get a real

estate agent to go and look at the place and

look inside it and that he would contact her,

the agent would contact her, to arrange a

time. The next time ..... I saw her she told me

that someone had been to look at the house.

She told me that there was no way she could

Louth(2) 12 8/4/92

pay the monies ..... the only thing that cold be

done at that stage was that perhaps if I could

buy the house, put it in my name and she could

stay there on the same arrangement she had had

with Arch and his wife.

TOOHEY J:  But in cross-examination of the plaintiff, was

the evidence of Volkhardt put to him?

MR LAWSON:  No, it is not, if Your Honour pleases. But, in

my submission, the conclusion that can be drawn

from that passage at page 53 is that the house was

not on the market. It was not being, as it were,

sold from under her, that he had contacted

Volkhardt and arrangements were made for him to buy

it and for its value to be appraised. It does not

suggest the sort of urgency that would give rise to

a situation of crisis.

BRENNAN J:  Mr Lawson, this comes back to the question that

Justice Deane asked you before. As I read the

judgments in the Full Court, two of Their Honours

accept the finding of the Chief Justice that there

was a sense of crisis engendered by her comments,

and I would have construed that sense of crisis as

being related to the likelihood of her being

required to vacate the house that was being sold.

If one looks at Justice Matheson's judgment at

page 388, His Honour comes to a different

conclusion, namely the one that you are now

contending for; that he must have realized in this

conversation with Volkhardt that the appellant was

not facing an early crisis.

Now, if the point of division is between

Their Honours on the basis of whether or not there

was that crisis, then how is it that this Court

should resolve it, in the light of the majority

findings in the Full Court and the finding of the

primary judge?

MR LAWSON: Well, it is, of course, my submission that this

Court is in as good a position as the Full Court to

draw the inferences or reach conclusions from the

facts as found. Our principal point is that the

crisis, which was said to be a significant crisis

in the judgment of the trial judge, was not as

significant as was suggested, was not sufficiently

significant to deprive the plaintiff of his
capacity to see to his own interests, and was, in

any event, not the sort of crisis that could be

said could have persisted over the months in which

it took this transaction to be consummated.

This is not a case where the plaintiff has

said, "Faced with this particular crisis I felt that I had to do something to help her then and

Louth(2) 13 8/4/92

there and I didn't have time to reflect upon it".

This is a case in which the plaintiff does not say

at all that he was induced by the crisis to make

the gift, but he gives reasons, to Volkhardt at the

time, at page 219, of his love for her and his

desire to provide her for security and, in a

passage also referred to by the Chief Justice and

accepted by him, at page 313. He said to the

defendant's mother, at line 21 - admittedly this is
after the transaction but, in giving his

explanation as to why he had made the gift:

He said ..... he wanted to give this present to

Mary because he knew that she had had a lot of

strife and a lot of trouble and that it would

make her feel, give her safety and it was a

gift from him and there was nothing attached
to it, he didn't want anything back".

It is not a case where the plaintiff says, "Well, I gave the house to her because of the crisis of the

moment or because I believed that she was in

imminent fear of being dispossessed". It is a case

where the plaintiff had time to reflect and where, on the whole of the evidence, it is my submission that he had ascertained the true position from

Volkhardt.

The plaintiff's reasons for the transaction, far from being in response to the crisis, in my

submission, were his belief in the unhappy life

that she had had - 219 - and the insecurity that

she suffered from, a secure place to live. All of

that was true. It was not the case that the

situation was contrived by the defendant to suggest

that she had had an unhappy life when she had

actually had a happy life or that she was in a

position of security or wealth. It was the true

position, namely that she was in an insecure

position.

It is true, as the Chief Justice said, that in

one of the conversations on one occasion, the

defendant said that she might take her life, but

the plaintiff's evidence - and he only mentioned it

on one occasion - does not suggest that that was a

threat that was persisting or had any immediacy or

that he was ultimately induced to transfer the

property because he then was under the serious fear

or apprehension that she might commit suicide.

So, it is our submission, firstly, that what

is termed the manufacturing of an atmosphere of

crisis is a conclusion that this Court should not

reach, but if contrary to that submission that

finding is to stand, that the Court must examine

Louth(2) 14 8/4/92

what is the nature of the crisis thus created and

what was the defendant's response to it.

The Chief Justice said, at page 319, about

line 17, after he makes the finding of the

atmosphere of crisis:

There was no pressure upon her with respect to the house as the evidence of Volkhardt and her

sister make clear, but she knew that

ultimately she would have to go into a Housing

Trust home.

The next finding, in my submission, in the

following lines, is somewhat harsh on the

plaintiff:

The timing of her raising the topic of the

house is interesting. It is the plaintiff's

belief that he told her about the mortgage

moneys falling due in June after the topic of

the house was first raised.

And that is, in fact, the evidence. And then the

trial judge considers the possibility that he might

have confided this fact to her earlier, but in fact
he never said in his evidence or suggested that he

had confided in her. And these are findings that

follow, a conclusion at page 318, in the middle of

the page, at about line 15, where His Honour says:

The result of this toleration -

by the defendant of the plaintiff -

was to feed the flames of the plaintiff's

passion and to keep alive his hopes that the

defendant wold relent and that his devotion

would be requited.

But it is the fact on the evidence, in my

submission, that Volkardt had sought to quell those

flames and had put the true position to him. It

was not the case that the plaintiff, as it were,
was encouraged to believe that his devotion would

be requited. Indeed, he had been told to the

contrary and he said to the defendant's mother,

Mrs Webb, this is at page 313 in the passage that I

mentioned earlier, that there was nothing attached

to it and he did not want anything back.

So, if the Court were not prepared to come to

a different conclusion, or draw a different

inference from the evidence relating to the

circumstances in which the plaintiff agreed to make

the gift, the question would arise as to what sort

of a crisis it was, and was this a crisis of the

Louth(2) 15 8/4/92

kind which put the plaintiff in a position of

special disability.

DEANE J: But unless we interfere with the findings of fact

made by the Chief Justice and confirmed by the

Full Court, you have a situation in which it is

found that your client manufactured a crisis in a

context where she had told the defendant that if

she had to leave the house, which it seemed she was

going to do, she would kill herself, and where the

defendant believed it. Now, is not the first

question, "Can this Court properly interfere with

those concurrent findings?", and then, if it cannot

that must be the context in which we approach the

case.

MR LAWSON:  In my submission, that is not necessarily the

whole answer because to say "manufactured a

crisis", that is, said that she might have to leave

and that she would kill herself if she had to leave
and he believed it - now, what is the quality of

the crisis thus created? Was it entirely

manufactured? In my submission, it was beyond

proof whether or not she had an intention to commit

suicide at the time.

DEANE J: But it is implicit in His Honour's finding of a

manufactured crisis, and his interpositioning of

the evidence, that the threat to kill herself and

so on fitted into it.

MR LAWSON:  Yes, although the case would, of course, in my

submission, be different, and the Court might be

bound to accept that finding, if it were the case

that immediately upon the threat having been made,

or if the threat were made in other circumstances,

the plaintiff had gone out and signed over the

house.

DEANE J:  Yes, except you said it was only mentioned. The

plaintiff's evidence in relation to it goes for	about five to six pages, does it not, and it is
quite clear that, on his evidence, it had a
profound impression on him. I was reading from
page 54 on.

MR LAWSON: Well, he said, and I obviously cannot escape the

fact, that he believed that she might do it.

DEANE J:  And he had been dreaming about the previous

occasion and how worried he was and everything

else.

MR LAWSON:  I will not repeat the submissions that have

already been made in respect of that. It is my

submission that that is really a conclusion, or a

judgment, the Chief Justice - on the facts, but in

Louth(2) 16 8/4/92

my submission it is not the only judgment to be

derived from those facts. If there was no - to say

ttmanufactured a crisistt suggests, as the

Chief Justice found, smacked of fraud, invented a

situation where no such situation existed. The

important point is, what was his understanding of

the facts and did he have an appreciation of the

true position, because in relation to the house, it

is my submission, he did, from his discussions with

Volkhardt.

BRENNAN J:  If you look at page 86 you see another passage

from the discussion with Volkhardt in his

cross-examination which ends with him saying to

Volkhardt:

'Look, are you prepared to sell the house to

me or not?'

Now, where would he have got the idea that

Volkhardt was in the market for selling the house?

MR LAWSON: Well, I am not sure that it was ever put to him

but he said, in the passage, I think, between 48

and 54, that there was a discussion with Mary about

the possibility of him buying the house; that there

was a matrimonial dispute; there was to be a

property settlement; that she was being invited, as

Volkhardt said, to put her name down on the public

housing list; and in those discussions the

possibility of him buying the house, firstly, him

lending her the money and then buying the house,

came up. The evidence is not open to the

interpretation that, as it were, she

surreptitiously sowed the seeds in his mind.

Volkhardt accepted that eventually it would have to

be sold.

TOOHEY J: There is an underlying problem with the

fact-finding, I think, namely that the plaintiff's

case, as presented at trial, was that he was not

making a gift.

MR LAWSON:  Yes, Your Honour - a finding which the Chief

Justice rejected.

TOOHEY J:  So a lot of this evidence about manufacturing of

crisis, the threat to kill herself, and so on, it

is not easy to accommodate with the plaintiff's own

account that, in fact, he was not intending to make

a gift in any event. He was intending to make a

loan or to enter into an arrangement by which the

property would eventually be retransferred to him;

a proposition that was rejected the trial judge.

MR LAWSON: That is a difficulty, in my submission, in, as

it were, resolving what the true position was.

Louth(2)	17	8/4/92
TOOHEY J:	I am not suggesting it is your difficulty.	It

was just a difficulty in how one approaches the

fact finding in this case.

MR LAWSON:  I might then mention the next important

conclusion that the Chief Justice reached and which underpins his finding of exploitation of a position

of vulnerability. It is at page 320 and it begins

about line 7:

I am satisfied that it was a process of

manipulation to which he was utterly

vulnerable by reason of his infatuation. I

disbelieve the defendant's evidence that she

thought the plaintiff was a wealthy man.	I
find that from her conversations with the

plaintiff she was aware in general terms that

he had only limited assets, that the mortgage
moneys were his principal asset and that he
had to work as an employee solicitor for a

living. Moreover she was aware that he had

three children who had natural claims upon his

bounty.

The outright gift of a house worth

$58,000 by a man of limited assets having

three children in his care, to a woman who did

not return his love and with whom he had no

future, was a most improvident transaction and

I believe that the defendant well knew that.

It is an improvident transaction when one takes his

now perspective, but if one looks at it from the

defendant's point of view, compared to her he was

well off.	She was unemployed and a social service
recipient.	He was a solicitor in employment,

showered her with gifts. She did not learn until

after the question of the house arose that he had

an investment maturing and she had requested his

assistance.	The plaintiff never suggested in his
evidence that he had told the defendant of his
financial position.	He did not suggest, in other

words, that he was a poor man and that he would be

unable to benefit her. Indeed, he, on the

evidence, gave the impression of a man who was reasonably comfortably off and able to provide

benefits to her.

The question arises as to why was it an

improvident transaction. He presumably, and on his

evidence, felt that there was advantage in it to

him of the possibility of his improving his

prospects with the plaintiff and of improving the

relationship which, even at that stage, he

harboured the hope, as the Chief Justice found,

that she might marry him or enter into some more

congenial relationship.

Louth(2) 18 8/4/92

The submission is also made here that if the defendant's unconscionable conduct was her refusing

to yield up the property in 1988 when requested to

do so, by that stage the defendant did know that
the plaintiff had not insubstantial resources from

within his own family. He had the capacity, as is

demonstrated at page 71 of the appeal book, to

borrow substantial amounts from his mother.

In the Full Court, there was a difference of

opinion. The Acting Chief Justice,

Mr Justice Jacobs, was not inclined to accept the

proposition that the plaintiff was suffering from

an emotional dependence which deprived him of his

capacity to look after his own affairs. His Honour

says, at the top of page 331, four lines in:

It would in my view stretch the concept of

unconscionable conduct too far to hold the

conduct of the other party taking the benefit

of the transaction to be unconscionable, only

by reason of an awareness of the 'emotional

dependence' of the donor or transferor.

That explains why the many gifts and

other assistance showered upon the appellant

are immune from attack.

At page 332, His Honour refers to, about line 8,

the:

explicit and unequivocal findings of fact.

Firstly, about line 7:

He found -

that is His Honour the trial judge found -

that the appellant falsely claimed to be

facing eviction from the house by reason of

the breakdown of the marriage.

In my submission that places a wrong emphasis, because at the time when he made the gift the

plaintiff was aware of the true situation with

regard to the house.

The second fact, at line 10, that

Justice Jacobs relies upon:

that she knew a mortgage debt owed to the

respondent had been repaid.

Now, as the Chief Justice held, at page 319 of the

transcript, at the time he agreed to make the gift,

Louth(2) 19 8/4/92

she was unaware of the repayment.	And then
His Honour further says, at line 12:

she rejected out of hand a loan to enable her

to buy the house; that she also rejected his

proposal to purchase the house in his own

name -

but reasons were given and accepted by the

plaintiff for those. The reason she rejected the

loan was the reason stated and the reason which he accepted, namely, that it would provide him with a lever over her and she, in the event, had no

capacity to repay it. And, of course, His Honour

makes the same finding the:

false picture of crisis -

it is our submission that there certainly was a

picture of crisis created, but to say that it was a

false picture it places a wrong emphasis, and

His Honour's findings, based at the bottom of

page 333, line 20, upon:

The emphatic findings -

he described as the emphatic findings which, in my

submission, are really conclusions or inferences

that were drawn.

In the judgment of Justice Legoe, His Honour

took the view, and held, page 375, three lines from

the bottom: that the plaintiff was suffering:

A condition of total "emotional dependence" -

which goes beyond, in my submission, the finding of

the Chief Justice and certainly beyond that of

Justice Jacobs. His Honour also accepts, as has been put to me, at the bottom of page 376, that he

adopts the finding of the judge:

that she "deliberately manufactured the

atmosphere of crisis -

and I do not propose to put the submissions I made

in relation to that to the Court again.

BRENNAN J: But is there any more to this case than that

because as His Honour there says, that finding is

crucial to the granting of equitable relief? With

that finding, you fail; absent that finding, you

succeed. Is there anything more to the case than

that, subject to what Mr Bennett has to say, no

doubt?

Louth(2) 20 8/4/92

MR LAWSON:  There is, in my submission, because one still

has to examine the nature of the crisis thus

created. Did it, in fact, deprive the plaintiff of

his capacity to see for himself what the position
was, or to see to his own interests? Should it
have deprived him, in all the circumstances, of his

capacity to look after his own interests, bearing

in mind his professional qualifications, bearing in

mind the time in which it took to consummate the

transaction, bearing in mind the information he had

obtained from other sources, bearing in mind his

own desire expressed on a number of occasions to

benefit the defendant.

BRENNAN J: Is it not enough that a fraudulent

representation is made which induces the donor to

make a gift?

MR LAWSON: Well, in my submission, to equate a domestic

crisis with a fraudulent misrepresentation is to,

as it were, give a colour to the domestic situation
that should not be given. This is not a case

where, as I have submitted before, the defendant

manufactured or invented an unhappy life, invented

the possibility of her having to leave her house.

This is a case where objectively it can be said

that it was a crisis, for her. She had been living

in a house that belonged to her relations and now

that situation had changed.

MASON CJ:  Mr Lawson, we will adjourn now and resume at

2.15.

AT 1.03 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.19 PM:

MASON CJ: Yes, Mr Lawson?
MR LAWSON:	The trial judge and also the majority of the Full Court took Your Honour the Chief Justice's
formulation in Commercial Bank of Australia v
Amadio, 151 CLR 447, as the appropriate
formulation.  As the Court will recall, this was a
case of a guarantee executed by an elderly couple unfamiliar with the English language, and in support of a son's business in circumstances where they were unaware of the true purport of the document and of the background circumstances.

Louth(2) 21 8/4/92

I should say that the majority of the Court

granted relief to the guarantors, the Chief Justice

Sir Harry Gibbs on grounds of non-disclosure rather

than unconscionable conduct. Your Honour

Mr Justice Dawson dissented. Justices Mason,
Wilson and Deane upheld the claim on the ground of

unconscionable conduct, Justice Wilson agreeing

with the reasons of Your Honour Justice Deane. At

page 461, in the judgment of Justice Mason, there

is a passage which is set out, beginning at about

point 2 of the page:

Historically, courts have exercised

jurisdiction to set aside contracts and other

dealings on a variety of equitable grounds. That passage was set out in full by the

Chief Justice and also referred to at length by the

judges in the Full Court. The only passage I think

I need read from is about point 6 on page 461:

There is no reason for thinking that the

two remedies -

that is, the remedy in respect of undue influence,

and that in respect of unconscionable conduct -

are mutually exclusive in the sense that only

one of them is available in a particular

situation to the exclusion of the other.

Relief on the ground of unconscionable conduct will be granted when unconscientious advantage

is taken of an innocent party whose will is

overborne so that it is not independent and

voluntary, just as it will be granted when
such advantage is taken of an innocent party

who, though not deprived of an independent and voluntary will, is unable to make a worthwhile

judgment as to what is in his best interest.

That is the test which was applied here. It was

held that the plaintiff was unable to make a

worthwhile judgment as to what was in his best

interest.

Your Honour set out the passage from the

judgment of Justice Fullaghar in Blomley v Ryan at

the top of page 462:

"The circumstances adversely affecting a

party, which may induce a court of equity

either to refuse its aid or to set a

transaction aside, are of great variety and

can hardly be satisfactorily classified.

Among them are poverty or need of any kind,

sickness, age, sex, infirmity of body or mind,

drunkenness, illiteracy or lack of education,

Louth(2) 22 8/4/92

lack of assistance or explanation where

assistance or explanation is necessary. The

common characteristic seems to be that they

have the effect of placing one party at a

serious disadvantage vis-a-vis the other."

One party at a serious disadvantage vis-a-vis the

other. And likewise Justice Kitto, who was in

dissent in Blomley v Ryan, this passage of

principle is often cited:

"a well-known head of equity" which -

applies whenever one party to a transaction is

at a special disadvantage in dealing with the

other party because illness -

et cetera -

or other circumstances affect his ability to

conserve his own interests, and the other

party unconscientiously takes advantage of the

opportunity thus placed in his hands".

MASON CJ:	Is that not the statement of principle that has been applied?
MR LAWSON:	Yes, subject only to this, in the same case

Justice Deane adopted, in my submission, a slightly

different approach, which I will come to in a

moment, but it is an approach which focuses to

rather a greater degree upon the equality between

the plaintiff and defendant. As Your Honour went
on to say - this is in the middle of page 462:

I qualify the word "disadvantage" by the adjective"special" in order to disavow any suggestion that the principle applies whenever

there is some difference in bargaining power

of the parties and in order to emphasize that

the disabling condition or circumstance is one

which seriously affects the ability of the

innocent party to make a judgment as to his

own best interests, when the other party knows

or ought to know of the existence of that
condition or circumstance and of its effect on

the innocent party.

So Your Honour there, by the use of the adjective

"special" in connection with "disadvantage",

disavows the suggestion that the principle apples

whenever there is a difference in bargaining power.

Justice Deane, in my submission, at pages 475

to 477, places some emphasis upon the equality or

comparative equality between plaintiff and

defendant.

Louth(2) 23 8/4/92

At the top of page 475 Your Honour referred to

Mr Justice Fullagar in Blomley v Ryan, at the very

top of the page:

the common characteristic ..... they have the

effect of placing one party at a serious

disadvantage vis-a-vis the other.

And at the bottom of the page:

I turn to consider the question whether,

at the time they executed the

guarantee/mortgage, Mr and Mrs Amadio were

under a relevant disability in dealing with

the bank.

And then on page 476:

The bank, for its part, was a major

national financial institution. It was privy

to the business affairs -

et cetera. Your Honour is there looking at, as it

were, the position of the bank. About eight lines

from the bottom, in a new paragraph on page 476:

It is apparent that Mr and Mrs Amadio,

viewed together, were the weaker party to the
transaction between themselves and the bank.

Their weakness may be likened to that of the

defendant in Blomley v Ryan of whom McTiernan

J said:

"His weakness was of the kind spoken of by

Lord Hardwicke" [in Earl of Chesterfield v

Janssen] "in defining the fraud characterised as taking surreptitious advantage of the

weakness, ignorance or necessity of another.

The essence of such weakness is that the party is unable to judge for himself."

That weakness constituted a special disability	of Mr and Mrs Amadio in their dealing with the
bank of the type necessary to enliven the equitable principles relating to relief against unconscionable dealing. Put more precisely, the result of the combination of
their age, their limited grasp of written
English, the circumstances in which the bank presented the document to them for their signature and, most importantly, their lack of
knowledge and understanding of the contents of
the document was that, to adapt the words of Fullagar J quoted above, they lacked
assistance and advice where assistance and
advice were plainly necessary if there were to

Louth(2) 24 8/4/92

be any reasonable degree of equality between

themselves and the bank.

The next question is whether the special

disability of Mr and Mrs Amadio was

sufficiently evident to the bank to make it

prima facie unfair or "unconscientious" -

It is my submission that, in determining whether

the principle of relief against unconscientious
transactions is to be enlivened, the Court has to

give consideration to the degree of equality

between the parties, on the approach adopted by

Justice Deane. It is our submission here that when the relative equalities between plaintiff and

defendant in the present case are considered, the

plaintiff was not the weaker party in that sense.

They were in more or less comparable positions.

McHUGH J:	But the trial judge found that your client had power over this man by reason of his infatuation with her, and it would not have mattered if he had
gone to his mother or her mother or to 10 other
solicitors to seek advice, it would have had no
effect on him.  He was, on the trial judge's
finding, smitten by this woman to the extent that
he was powerless and that she then manipulated the circumstances and manufactured a crisis. Unless
you can set those findings of fact aside, it seems
to me at the moment the law is rather irrelevant.

MR LAWSON: Manufactured a crisis, yes, if Your Honour

pleases, but it cannot be the case that it is every

crisis that deprives a man of his capacity to judge

what might be in his own best interest. If she had

made some trivial threat, for example, that she

would not go out with him next Saturday night, or

some other matter, that could be a crisis, but

obviously it is not every crisis that deprives a

person or, in the eyes of the law, can be capable

of depriving a person of his capacity to look after

his own interests.

DAWSON J: Really, is it not deeper than that, are you not

saying that being in love is not being in a

position of disadvantage?

MR LAWSON:  I do make that submission, or being infatuated,

or being overly impressed, or desiring to advance
one's suit, or any number of other considerations

that might apply in relationships of this kind, to

what might be termed domestic relationships.

McHUGH J: It depends on whom you are in love with, does it

not?

MR LAWSON:  I am not sure that I -

Louth(2) 25 8/4/92

McHUGH J:  I mean, if you are in love with some designing,

scheming woman who is prepared to manufacture a

crisis and manipulate you, then you are

vulnerable. She is taking unconscientious use of

a power over you.

MR LAWSON: But, if one wants to be manipulated; if one is

submitting oneself to manipulation, that is not a

manipulation of a fraudulent kind. It is not

really manipulation at all.

MCHUGH J: Yes, but the argument against you is, he gave her

gifts, and he could give her as many gifts as he

wanted to, and he could not later claim them back

if they were a result of his infatuation with her,

but the critical thing here is that you inject

into this, what might be regarded as her

dishonesty, "her fraud", to use the trial judge's

words.

MR LAWSON:	Smacked of fraud, yes.
McHUGH J:	Smacked of fraud.
MR LAWSON:	If he were a man of immature years, if he were

not a man of some experience - he had been married

on a couple of occasions previously - if it were

not the case that he had said at the time, given

reasons and explanations to others at the time as

to why he was making the gift, then it might be the

case that he could come to the court and have the
court draw the inference, not that he ever said it

himself, draw the inference or make the conclusion

that he was so infatuated that he was unable to

conserve his own interests, then that would be the case Your Honour posits, but that is not this case

in my submission.

TOOHEY J:  It is not the case put against you. The case is

not one of infatuation, the case is one,

essentially, of this so-called manufacturing of a

crisis. If you can strip away a lot of the emotive
language that seems to be present in this case,

essentially is not the argument that the respondent

threatened to kill herself - firstly, at least said

that she would be homeless and, secondly, that she

threatened to kill herself. Now, are they the two

ingredients that go to make up the so-called

crisis?

MR LAWSON:  Yes.

TOOHEY J: Are there any other elements present?

MR LAWSON:  No.

Louth(2) 26 8/4/92

TOOHEY J:  One thing that is not clear to me, Mr Lawson, and

I do not ask you to take time now, but would it be

possible to direct us, in some written memorandum

perhaps, to those passages of the transcript which

deal with the question of the sale of the property, or the possible sale of the property, because it is

not clear to me, despite the evidence of the

brother-in-law, as to what exactly it was that the

plaintiff said he knew or did not know about the
possible sale of the house or, indeed, what the

defendant said she knew or did not know about the

possible sale of the house?

MR LAWSON:  Yes. I do not think - - -

TOOHEY J:  I am not asking you to do it now but it would

help us.

MR LAWSON:	No, I do not think there are passages other than those to which I referred this morning, but I will
examine that and provide the material.

TOOHEY J: For instance, it is not entirely clear, I think,

in the evidence of the respondent's brother-in-law

how much of his evidence as to there being no

urgency about the sale of the house he actually

communicated to the plaintiff. Just a quick

reading of the transcript seems to leave that a bit

in the air.

MR LAWSON:	Yes, I think it perhaps was left in the air, and one has to read that passage, I think at page 57,
of the plaintiff's evidence to draw the conclusion
that at that time, he must have known, and he
certainly did not say to the contrary. He must
have known at that stage that there was no
immediate plan to sell the house.
DEANE J:	Was it suggested to the defendant in

cross-examination that she had manufactured a

crisis?

MR LAWSON:	Not in terms.
DEANE J:	Or that she had not really been told that she

would have to leave?

MR LAWSON:  No, it was not ever put to the defendant. At

page 168 of the transcript is the only occasion on

which, so far as my researches go, the word

"crisis" was used. At page 168, line 7, the

question was put in cross-examination:

Q. You say that you had a premature crisis

about leaving the house, is that what you are

telling us.

Louth(2) 27 8/4/92

A. No, I didn't have a crisis about leaving

the house.

Q.	Why discuss it madam.
A.	I don't recall discussing it was a crisis.

I just said I wouldn't like to leave the

place. It wasn't a crisis.

Q. Why bother to say it.

I think the questioner there is saying, "Well, why bother to raise the question of you leaving the

house?" She said at the top of that page:

A. I was worried about leaving in years to

come, not then.

So it was never put to her directly that she had

manufactured the whole crisis. It was of course

put to her that she had said that she would commit

suicide or that she would attempt to do so, but she

denied that she said that. Of course, the trial

judge did not accept her denial on that.

TOOHEY J: Did that aspect of the case turn on any evidence

other than that of the plaintiff and the defendant?

MR LAWSON:  No, it did not, Your Honour. The inference that

a crisis was created carries with it the suggestion

that the defendant falsely claimed that she would

commit suicide, that having no intention of doing

so, she made this statement in order to induce him

to alter his position. But, in my submission, it

is a very harsh finding, and an inference that

really should not be drawn is that if she did say,

as the judge found, that she might commit suicide,

that that was a false statement.

The fact was - and the Chief Justice did not

mention this in his findings - that after the house

had been given to her, she did make a further attempt upon her own life. It is not the case that	this was a woman who really had no intention or no
propensity to suicide. This appears at page 67,
line 21. As I say, this was not mentioned by the
Chief Justice or by the Full Court:

but the end of 1985 I visited her one Sunday

afternoon ..... and ..... noticed she had a black

ribbon round her right wrist.	She was
chatting gaily about something -

this is line 26 -

she sort of grinned rather wryly and said 'Oh,

well, I was feeling depressed the other night

and I tried it again' ..... I was rather

Louth(2) 28 8/4/92

irritated by that - I said to her 'Look, the

whole idea of trying to help you with the

house was to stop this sort of thing. Is this

going to continue?'

So, the reason I draw that passage to the Court's

attention is that this was not a lady to whom

crisis was some stranger. Her life, on the

evidence, appears to have moved from one crisis to

another, and she was, as it were, crisis prone.

There had been suicide attempts, there was a

divorce, there had been apprehension for

shoplifting, she was under treatment for

depression, as appears in the psychiatric reports

that were exhibited to the letter to the police.

To say that she manufactured in May 1985 the

possibility of suicide in order to induce the

defendant to pay for the house is an inference or

conclusion to which the court was not driven, in my

submission, and a threat of suicide, coupled with

the atmosphere of, one might categorize it as some

degree of crisis, for this particular woman to this

particular man, given the length of their

relationship, given their association over the

years, given the fact that he was fully aware of

her psychological detriments, is a crisis of a - it

is, in my submission, not a crisis of great order -

not one that should have, in the eye of the law,

adversely affected his ability to conserve his own

interests.

BRENNAN J:  Was the falsity of the statement or the alleged

statement that the sale of the house was imminent by the in-laws, ever in issue on the pleadings or

at the trial?

MR LAWSON:  I regret I cannot answer that question directly.

I do not believe it was, Your Honour, but I would have to myself check the statement of claim

to -

BRENNAN J: Well, do not delay now. I can see that on

page 6 of volume one there were some particulars

which are reputed under the various causes of

action were pleaded, which assert what the

defendant told the plaintiff, that she wanted to

live in the house and so forth, but I wondered

whether there was any issue of what she had told

the plaintiff in whatever terms it was, was told

falsely. If you do not know, do not let me delay

you.

MR LAWSON:  I think the situation can best be summarized as

follows, Your Honour, that it was not until

Volkhardt and his wife, Sarah Cartwright, gave

evidence that there was no immediate intention to

Louth(2) 29 8/4/92

sell the property, that this really emerged as an

issue.	When the plaintiff had given evidence it
was not an issue.	He was not saying that she was

alleging that she would have to get out

immediately.

TOOHEY J: But he was recalled for further examination and

further cross-examination. I am not suggesting in

relation to that point, but perhaps that is the

first question:  was his recall in any way related

to this aspect of the evidence?

MR LAWSON:	No, it was not as I recall.
TOOHEY J:	And would it be right to say that having been

recalled and being cross-examined, the

cross-examination was not directed at anything that

Mr Volkhardt had said which might have been

communicated by Mr Volkhardt to the plaintiff?

MR LAWSON:  No. In his recall, at page 244 and following,

that issue was not raised because that related, as

I recall, almost entirely to something that

occurred in 1988.

If it is appropriate to take into account, as

I submit it is, the degree of equality between

plaintiff and defendant, I have made the submission

that these parties were on reasonable equality.

Both suffered clearly detriments in the

relationship. She was bereft of assets. She had

psychological detriments about which I have spoken.

Her relationship with the plaintiff was not a

fulfilling one.	On the other hand, he suffered
certain detriments in relation to her.	He did have

what was described as "an enormous weakness" for

her, but the way in which that was established was

simply being put to her in cross-examination:

Did he have an enormous weakness for you?

And she said she accepted that he did. But that

really does not, in my submission, define the

relationship, just as His Honour the

Chief Justice's finding and the Full Court's

finding that he was emotionally dependent upon her.

One can have all sorts of emotional dependencies.

One might be emotionally dependent upon one's pets

or one's children, but simply to say one is
emotionally dependent does not satisfactorily

explain what detriment it is that one suffers in

consequence of that. To merely say that one is

emotionally attached or emotionally dependent does not constitute a finding of a disabling condition.

MASON CJ:  Mr Lawson, could I take you back to the question

that Justice Brennan put to you. I have read the

Louth(2) 30 8/4/92

statement of claim and it does not seem to me, on

reading the statement of claim, that there is an

allegation that the statements made by the

defendant to the plaintiff were false.

MR LAWSON:  No, that is -

MASON CJ: For example, if you look at page 8, paragraph 6,

which, as I read it, attempts to put in summary

what the plaintiff's case is, based on the

particulars that have been furnished in the
preceding pages of the statement of claim, it is

that the plaintiff was so deeply attracted that

there was a relationship of emotional dependence of

which the defendant consciously took advantage.

But it is not put on the basis of manipulation.

MR LAWSON: That is correct, and the plaintiff, in giving

his evidence, in my submission, on the proper

inference from his evidence, was not saying that he

was manipulated, and that really was not the issue.

It did not become the issue until the defendant got

into the box and gave her evidence and it was from

that, presumably, the trial judge formed the view,
as he was entitled to, that she was capable of

doing those things and, further, he held that she

had. But it was not against a contest in which the

plaintiff had ever advanced the proposition that

false statements had been made to him.

TOOHEY J: Well, that is not quite correct. There was an

allegation in the statement of claim that false

statements had been made to him, but not the false

statements upon which the trial judge founded his

judgment. The false statements were said to relate

to the agreement or undertaking to retransfer the house to the plaintiff. And, indeed, the case as

pleaded seems to have been very much in terms of an

arrangement by which there was no gift but by which

the house would be transferred to the defendant and

later retransferred by her to the plaintiff.

MR LAWSON:  Yes.

TOOHEY J: But there is the alternative claim, of course,

that if that - although I am not sure that the

statement of claim pleads the misrepresentation in

relation to that aspect of the matter. Does the

statement of claim plead that, as an independent

cause of action, if there were a gift it was

obtained by some false statement on the part of the

defendant? In the prayer for relief on page 12,

for instance, paragraph (i), there is a declaration

sought that payments were procured by undue

influence or unconscionable conduct, but I am not

sure, at a quick glance, what the foundation for

Louth(2) 31 8/4/92

that relief is in the body of the statement of

claim.

MR LAWSON:  That is paragraph 15. The claim based on

unconscionable conduct was introduced by amendment

and, unfortunately, this apparently does not appear

from the document which part was inserted by

amendment. I am not sure that that answers

Your Honour Mr Justice Toohey's question.

TOOHEY J: Well, it only answers it if, in fact, the answer

carries the implication that there is nothing in

the statement of claim to support a case for return

of the money or property based on unconscionable

conduct by reason of something said regarding the

sale of the house or the threat to kill.

MR LAWSON:  Yes. Well, the reliance in paragraph 15 is upon

the particulars - in the allegations in

paragraphs 3, 5, 6 and 14, and the - - -

TOOHEY J: Six certainly says something.

MR LAWSON:  It does, although it is not a plea of the kind

that Your Honour is referring, so I do repeat at

the forefront of the argument that the trial judge
should not have drawn the inferences that he did,
or reached the conclusions that he did, about the
falsity of the statements made by the defendant or
of her manipulation as the fact that that really

was not put by the plaintiff as part of his case.

TOOHEY J:  The difficulty about that might be, was it

suggested to the Full Court that it was not open to

the trial judge to decide the case in the manner in which he did, having regard to the way in which the case was run at the trial?

DEANE J: There is nothing in the notice of appeal to the

Full Court that suggests any such argument.

MR LAWSON:  No. I was not in the case then, but there is

certainly nothing that I have seen that suggests
that that was put to the Full Court on that basis.

Further to the submission that I make in relation to the inferences that were drawn, the members of the Full Court referred properly to the advantage

that the trial judge had in relation to seeing the

witnesses. Reference was made to the decision of

this Court in Wilton v Farnworth, 76 CLR 646.

This is another case in which a transaction

was set aside as unconscionable and it is a case in
which the particular transaction was a gift made by

a person, an elderly man, of dull intellect and

defective hearing and little education. The case

was an appeal from a decision of Justice Wolff in

Louth(2) 32 8/4/92

the Supreme Court of Western Australia. The

passage referred to by Justice Jacobs, and also by Justice Legoe, at 654 will no doubt be put against

me.	Four lines from the bottom:
In a case such as this the advantage possessed
by the trial judge of seeing the parties and
estimating their characters and capacities is
immeasurable. For not only does it affect
credibility but it affords the best evidence of what are essential factors in the case,
viz, the intelligence and other faculties of
the respective parties.

But in my submission, the type of findings about

which Mr Justice Rich was speaking and which

Justice Wolff had made in that case, and which are

summarized on page 654, are strictly speaking

findings of fact upon credit. They are not

inferences. For example, at 654, about the middle

of the page, there are some findings of fact set

out by numbered sentences.

In my submission, they are findings of fact so

called, and of course in a case such as Wilton v

Farnworth, where the critical finding was that the

plaintiff was a man of dull intellect, was a

finding upon which the trial judge would really

have the - I should put it this way: an appeal

court would have very little capacity to make any

finding upon a matter of that kind.

GAUDRON J:  Mr Lawson, I mean, the inference of manipulation

was clearly open to be drawn in this case, was it

not? I mean, quite apart from whether or not the
house was immediately for sale, there was the
notion of an immediate threat to commit suicide, a

refusal of one offer, a refusal of another, and

throughout the entire discussion the inference

being that, at the end of the day, your client

wanted this house in her name with title for

herself, and that was all that was going to stop

the feelings of insecurity and high anxiety which

she was developing, notwithstanding that even if

one took the view that the place was not to be sold

for some time?

MR LAWSON:  Your Honour, with respect, the defendant did not

make any threat of immediate suicide. The passage

which is set out in His Honour the Chief Justice's

judgment at page 310 at the top, does not, in my

submission, give rise to any threat of immediate

suicide. She says, well if it comes to that, at

the end of a day:

I'll just kill myself.

Louth(2) 33 8/4/92

GAUDRON J:  But it does not have to be an immediate threat,

it is the sense of anxiety generated at the

instant, and the continuing anxiety.

MR LAWSON:  The immediacy of the threat, in my submission,

is significant just as it would be in any form of

coercion. Something that may happen in the future

does not have that same character that might

deprive somebody immediately of his senses, and the

fact is that there was no immediacy, there was a

discussion that went on for some time. The

transaction itself was not consummated for some

time.

GAUDRON J: Perhaps if it gave the impression of continuing

high anxiety it was all the more effective of

manipulation?

MR LAWSON: That was not the plaintiff's case, in my

submission. It is my submission that the

disability of the kind, it is the disability

wrought by infatuation, even obsessive infatuation,

is not a disability of the type contemplated within
the formulation of the principle in Amadio.

The next element which the plaintiff would have to satisfy the Court on, if it were held,

contrary to my submission, that he was suffering

from a disability such as would enliven the

principle, is that the plaintiff had

unconscientiously accepted or retained the benefit,

and the essence of that is that she would have been

aware of his weakness, and that she would have

been, as it were, to use the expression of

Lord Justice Lindley in Allcard v Skinner, be

victimizing him.

In the passage that Your Honour Justice Deane

referred to in Verwayen v The Commonwealth, which

is referred to in paragraph 7 of my outline, the

principle is not to save persons from the

consequences of their folly and in my submission

this can properly be described as folly on the part

of the defendant, for the reasons he gave, namely

to provide her security and to remove the

detriments under which she had previously suffered,

it was folly for him to have made a gift of that

kind and that there really was, in my submission,

no difference in quality between the gifts of

champagne, washing machines and furniture and the

house. The mere fact that the house was, of

course, substantially more valuable did not alter

its quality, in my submission.

BRENNAN J:  Do you not have to go to the extent, to meet

Justice Gaudron's point, of saying that to excite

Louth(2) 8/4/92

sympathy in the heart of a besotted admirer is not

in any way to act unconscientiously?

MR LAWSON:  Yes, I would adopt that, with respect.

BRENNAN J: Is that your case?

MR LAWSON:  Yes, well it is. In a domestic situation, or

situation between admirers, all sorts of statements

of fond intention, hope, et cetera are made, which

could not excite the attention of the Court in a

suit based on unconscionable conduct. Is it

unconscionable of a man to say that he will remain

constant to someone for the rest of his life? Is

it unconscionable to - - -

BRENNAN J: Is it unconscionable to excite sympathy in the

heart of a besotted admirer in order that he might

make a gift?

MR LAWSON:	No, in my submission.
McHUGH J:	What about if you do it by deceit?

MR LAWSON: That, in my submission, might depend upon the

nature of the deceit. If at the time one threatens

suicide, having no intention of committing

suicide - if one said that one was about to be

thrown on the street and lose the roof over one's

head, but one, in fact.i was not, as it were, in

immediate danger of dispossession, that would not

be a deceit of a kind to excite the principle - to

as it were, as the Chief Justice describes it, as

to create a crisis.	One man's crisis is another
person's problem.	The Chief Justice described it

as a crisis but it was merely, in my submission, on

another view of the facts, her laying before her

friend, who had aided her in the past, what was at

that time a serious concern to her and it was not

open, in the circumstances, for the court to say

was not open to the court to find that, in those	that there was no basis for that concern, and it
circumstances, statements of that kind smacked of fraud.

McHUGH J: It is very difficult to get a feeling for the

case just reading it on paper.	I have the feeling
I would love to be at the trial	to see the parties,
to get some impression of them,	Mr Lawson.

MASON CJ: Well, at least we have been saved from that,

Mr Lawson. But you have covered most of the ground

now, have you not?

MR LAWSON:  Yes, if the Court pleases.

Louth(2) 35 8/4/92

DEANE J:  Mr Lawson, while you have been diverted, what

happened to Justice Jacobs' suggestion that the

proper result here was refund of the $58,000

without interest up to judgment?

MR LAWSON:  My understanding was that the parties did not

want that.

DEANE J: Did not want it. Well, that answers me.

MR LAWSON:  And some other form of order was assented to. I

should mention - - -

TOOHEY J: Just before you leave that point, so we know what

it is that is under attack, is the order that

appears at page 394 of the appeal books the order

that is challenged by this appeal?

MR LAWSON: Yes. That is the order. Finally, if the Court

pleases, I am not sure that I mentioned this

morning that the Chief Justice would have upheld

the plaintiff's claim also on the ground of undue
influence but that matter was not pursued in the

Full Court and, as appears from the conclusion of

Justice Matheson's judgment, it was conceded by the

plaintiff's representatives there that unless the
plaintiff succeeded on unconscionable conduct he

would not succeed on the facts as proved of

establishing undue influence.

DEANE J:  Mr Lawson, your paragraph 9(c) points out that

notwithstanding that the relationship cooled, the

plaintiff did not seek to get the property back

until three years afterwards. Now, how is that

put? Was it suggested that in the circumstances and in view of the correspondence there had been

affirmation of the gift at a time long after the

period of influence had ended? Was there any

suggestion of laches or delay, when she had been

living in the property for three years?

MR LAWSON:  No, it was not put in that way. Until August

1988 the parties remained on good terms.	The Full
Court held that he - - -

DEANE J: They remained on good terms, but they seemed to be

in a less intimate relationship steadily during

that period.

MR LAWSON:  The evidence, in my submission, establishes that

the relationship rather waxed and waned - - -

DEANE J:	I see.
MR LAWSON:	- - - the poems, for example, which were

written, were still being written in 1987, two

Louth(2) 36 8/4/92

years after. The last of them, I think, was

delivered in June 1987 and it was not until August

1988 that the relationship soured, and shortly

thereafter proceedings were instituted. The Full

Court held that such influence as the plaintiff was under continued throughout.

DEANE J:  I had missed that. There was a specific finding,

was there?

MR LAWSON: Justice Jacobs reached that conclusion.

DEANE J:  What did the Chief Justice say about that, at

first instance?

MR LAWSON:	If Your Honour will pardon me for a moment.
TOOHEY J:	You will find the Acting Chief Justice's

statement, I think, on page 321, Mr Lawson, at

about line 20.	It may be the fact that you have in
mind.

MR LAWSON:  Yes, it is, Your Honour.

DEANE J: Yes:

His will remained subject to her influence.

MR LAWSON:	Yes.
DEANE J:	What did the Chief Justice say about that?

MR LAWSON: That is the Chief Justice at 321, and

Acting Chief Justice Jacobs, in a passage that I am

afraid I cannot immediately locate - - -

DEANE J:	Do not trouble with it.
MR LAWSON:	It was to the same effect, but certainly the

Chief Justice reached that conclusion.	They are
the submissions of the appellant.

MASON CJ: Thank you, Mr Lawson. Yes, Mr Bennett?

MR BENNETT: Your Honours, I hand up an outline of

submissions, and I also hand up a set of answers to

my friend's submissions before lunch. I have set

those out in two columns with his submission and my

reply.

MASON CJ: Thank you.

MR BENNETT:	Between the last case and this case I have worked out how to use the column control on my word
processor.

Louth(2)	37	8/4/92
MASON CJ:	I gathered that.	Mr Bennett, I thought that

there were later authorities in this Court on

concurrent findings of fact after the Commonwealth

v Introvigne. You do not have a reference?

MR BENNETT:  I do not, Your Honour. Devi v Roy is certainly

the most dramatic example that I am aware of.

MASON CJ: Yes.

MR BENNETT: If Your Honour pleases, I think I will work

from the submissions. It might be easier at this

stage.

MASON CJ: Yes.

MR BENNETT:  The first two grounds of appeal suggest that

the Full Court ought to have interfered, and ought

not to have regarded itself as bound by the trial

judge's findings. Those grounds of appeal are, in

my respectful submission, destroyed by my learned

friend's concession at the beginning of his

argument, and indeed disclosed from the judgments

in any event, that both judges of the majority came

to the conclusions they came to independently of

the Chief Justice's reasons. In other words, both

of them not only accepted what the Chief Justice

said, but also said, in effect, "Independently of

His Honour's findings we would have come to the

same conclusions."

May I just show Your Honours that they both do

that. Mr Justice Legoe at page 359 line 15 says:

Dealing shortly with the grounds of

appeal which attack the findings of fact made

by the learned Chief Justice it seems to me

that the evidence as a whole, the findings as

to the reliability of the witnesses, as well

as many undisputed facts clearly supported the

conclusions of the learned Chief Justice.

So His Honour, in my respectful submission, forms

the view himself.

TOOHEY J: But is that the only justification for that

submission?

MR BENNETT:  Your Honour, we also put it on the basis that

the decision - I am prepared myself to support the

submissions.

TOOHEY J:  No, the submission that the Full Court

independently reached conclusions of fact

concurrent with those reached by the trial judge.

Louth(2)	38	8/4/92
MR BENNETT:	No, there is another passage, Your Honour. page 374 line 22 - - -	At

MASON CJ: That hardly supports your submission, does it?

MR BENNETT:  The first part does, Your Honour:

Accepting the findings of the learned

Chief Justice as I do and as I consider we are

bound to do -

The word "and" suggests there are two separate

matters. First, His Honour is saying that he

accepts them on the basis of his own analysis; and

secondly, he considers, my friend would say

erroneously, that he is bound to do so.

Mr Justice Jacobs, the Acting Chief Justice, said at line 3 of his judgment on page 330:

I am in substantial agreement with the

judgment of Legoe J.

That, in my respectful submission, indicates an

agreement with those parts of the judgment which

are concerned with issues of fact because he goes

on to deal with other aspects.

So, Your Honours, the first matter is we say

the findings were reached independently. Secondly,

in any event, my learned friend has referred

Your Honours to the passage in Wilton v Farnworth

about immeasurable advantage. There are similar
passages in a very recent decision of the Full

Court of Queensland in Baburin v Baburin (No 2),

(1991) 2 Qd R 240, and there are two passages there

in an undue influence and unconscionable conduct

case where Their Honours refer to the advantage the

trial judge has. The first is at page 243 line 10,

Justice McPherson says - perhaps going back to the

beginning of His Honour's judgment: 

I have had the advantage of reading the

reasons for judgment of Williams J. I agree

with his Honour's analysis of the facts and
with his reasons for concluding that the
findings of the learned trial judge on the
questions of undue influence and
unconscionability should not be disturbed. In
this instance, far more than in cases of other

kinds, those findings rest upon impressions

formed of persons who gave evidence at the

trial. In particular, having seen and heard

Mrs Baburin, the trial judge will have been

able to assess, in a way that we cannot hope

to do, the extent of Mrs Baburin's fluency in

English, her grasp of matters of business, and

Louth(2) 39 8/4/92

the probable extent of her dependence on
others for assistance in comprehending the

nature and consequences of the transaction

impugned.

Justice Williams, at page 252, line 40, about six

lines from the end of the paragraph, says:

Judges concerned with allegations of undue

influence or unconscionable dealing frequently

speak in terms of "the weaker party", "the

stronger party", and persons under a

disability. The trial judge is in a

peculiarly advantageous position in making

such a comparison between the disputing

parties, and in such cases the advantage of

seeing and hearing the witnesses assumes even

greater significance.

So it is not merely observing the traditional

situation of observing a witness in order to assess

credibility; it goes further than that. It is a

situation of observing witnesses for the purpose of

assessing their personality and character and

forming a view on it. One is reminded to some

extent of the case in which three members of this

Court recently refused special leave, the case of

Cameron v Rural Press, where the Full Court of the

Federal Court, in an unreported judgment, upheld a

decision where a trial judge had medical

certificates tendered by a litigant in person

andthe judge said, "Notwithstanding the medical

evidence", which was actual evidence, "I have seen

you in front of me as a litigant in person and I

form the view you're able to proceed". The Full

Court said that was a legitimate exercise of the

judge's role and this Court declined special leave.

It is part of the same approach that a court

is not blind to what goes on in the courtroom and

is entitled to make observations, and, in this case

of course even more strongly, to use observations

of witnesses to form views.

When one looks at the facts of this case, the

remark made a few moments ago by Your Honour

Justice McHugh stands out very, very clearly.	One
really does, in order to be able to do justice
between these parties, wish one was there.	One

would then be able to form an assessment to look at

the respondent, who was obviously held by the trial

judge to be a strange character who was totally

under the dominance of his infatuation, and to look

at the appellant, about whom the more critical

findings were made, and to form a view which one

simply cannot form on paper.

Louth(2) 40 8/4/92

TOOHEY J:  I can understand that more readily if the case

were one of emotional dependence only. Clearly the

trial judge would be a long way ahead of anyone

else in making that sort of assessment, but this is

not a case, as I understand it, which is placed

merely on the basis of emotional dependence.

MR BENNETT: It is a combination of two things, Your Honour.

It is a combination of being in a position where -

blinded by love or whatever phrase one wants to use - but one has a combination of that, combined

it is very hard to express it without using almost

with the abuse of the situation created by that, by
means of conduct which smacked of fraud and which

had the deficiencies which Your Honours have heard about and which I will deal with in a few moments,

and it is really the combination of those two
things which is the unconscionability.

But, certainly, a large part of the case consisted of the judge having to make findings as

to who said what to whom, what each party believed

at the time, what each party knew at the time, and

all those matters. But the judge also had to look

at the context in which those remarks were made,

and the context was one involving the relationship

between the parties. Now, I will say more about

that when I come to my friend's submission about

the absence of inequality. But, for present

purposes, at least half the issue in the case was

the extent of his infatuation and, perhaps more

than that, the extent to which he was a person

likely to be ruled by his infatuation, likely to be

unable to control himself when faced with a

decision where that infatuation was a major factor,

and it is those matters which one needs to see the

witnesses to understand.

Reading this, one might say, very easily, what

sort of man is going to react in that way;	why did
he not just tell her to go away;	why did he not
try and calm her down;	why did he not send her to
a psychiatrist;	why did he not do all sorts of
things;	why did he not investigate the truth of
what she said?	One can ask all sorts of questions

like that, but if the judge forms the view, looking

at this man who the judge describes as a strange

character, something that can only be based on an

impression of seeing him in the witness box, he is

then able to form the conclusions he formed. And,

in my respectful submission, it is a case where the

court would be reluctant indeed, even at the Full

Court level, to interfere with the trial judge's

findings.

Louth(2) 41 8/4/92

The fourth point we make on this aspect is

that notwithstanding the passage in Warren

v Coombes which is frequently cited and, perhaps,

treated almost like statute rather than traditional

authority, there is not a bright line between

inferences and other facts. There are all sorts of

situations in which courts have to draw conclusions

other than from absolutely direct evidence. If

someone says that a car was red, that, I suppose,

is direct evidence. If there is evidence that the

defendant was seen driving a red car and then five

minutes later a car of unknown colour driven by the

defendant was involved in an accident, one might

draw the inference that it was a red car. But in

both those cases the court is really looking at all

the evidence and saying, "What were the ultimate

facts, having considered them?"

The real test, we would respectfully submit,

is not whether it falls within or without some
precise legal category of inference on the one side

of a bright line, and fact on the other side of

that bright line, but rather whether the particular

finding is one in relation to which the judge is in

a superior position to an appellate court, and one

can ask that question very much more easily. There

are all sorts of issues where the court can read a

transcript and say, "Really, this court is in every

bit as good a position as the trial judge was,

having read that transcript, to work out what the

facts were and to draw inferences".

There are other cases where the court is not

in such a good position, particularly, I suppose,

cases where credibility is directly in issue. This

case had two issues in the broad, one that

concerned competing credibility and one concerned

the types of people which the two parties were and

their relationships to each other within that

context. Both those broad areas were matters in

respect to which the trial judge had, in my

respectful submission, an enormous advantage.

Now, the final matter is the submission that

the inferences were correctly drawn. I will return

to that because it is a matter which I have to go into in detail in relation to particular aspects.

The second broad area of law which my learned friend submitted to the Court concerns the

categories of unconscionable conduct. The question

really is, does one treat the enumerations by

Your Honour the Chief Justice and Your Honour

Justice Deane in Amadio, following the references

in the earlier cases - Mr Justice Fullagar and

Mr Justice Kitto in Blomley v Ryan - does one treat

those enumerations as laying down some closed list

or semi-closed list with the final general words

Louth(2) 42 8/4/92

being treated ejusdem generis, or does one take a

rather broader view of it. That is one way of

looking at it.

We would submit, in the alternative, first

that one should take a very broad view and simply

look, not for a category of relationship but rather

to the overall position of the parties. But if one

does look to a category of relationship, if,

contrary to my submission, one does have to say,
"You must be in some category that the court looks

at beyond merely being in a position of

disadvantage or a weak bargaining position or so

on", then we say this was one; that being totally

infatuated with another person to the extent that

one is prepared to do things for that other person

however much one is disadvantaged oneself, combined

with an abuse by the other person of that position,

a knowing abuse of that position, must, in my

respectful submission, be within an appropriate

category.

DAWSON J:  Where do you categorize use? You say it has to

be unconscionable conduct but why is accepting some

gifts, which are given merely by reason of the

infatuation of the other party, acceptable, whereas

other gifts are not?

MR BENNETT:  Yes, Your Honour. The answer to that,

Your Honour, is this,	that one of the factors one
has to look at is the	extent of the improvidence of
the act. If a man -

DAWSON J: Why?	It is only a matter of degree.
MR BENNETT:	The whole jurisdiction is a matter of degree.

DAWSON J: No, it is not. This is taking advantage of a

person's position of disadvantage, and merely accepting a gift is taking advantage of that: you	know he would not do it if he were not infatuated,	and the bigger the gift, well, perhaps the bigger
the infatuation, but what is the difference?

MR BENNETT: Well, at first there was no question of

quasi-fraud in relation to the other gifts. The

element that the transaction smacked of fraud and

that she deliberately took advantage and so on just

did not apply in relation to the other gifts. It

was merely the more normal situation of a person
who is in love with someone else providing, from

time to time, moderate presents for that person.

There is nothing that strikes -

DAWSON J: Let me test it this way. If, apart from the

finding that a situation of crisis had been

manufactured, if he had just decided to give her

Louth(2) 43 8/4/92

the house, you would say that was perfectly all

right in that situation?

MR BENNETT:  So far as unconscionable conduct is concerned,

I would have to find some inducement on her part,

some taking advantage on her part, before I could

succeed.

DAWSON J:  She is taking advantage of his infatuation, by

accepting the gift.

MR BENNETT:  No, one has to go further. For undue

influence, that would be sufficient - - -

DAWSON J: Well, we are not talking about undue influence.

MR BENNETT:  We are not talking about undue influence here.

Your Honour, when one talks about taking advantage

of, in all the cases I can think of in this area of

law, there has been some deliberate conduct beyond

merely being a passive recipient. I am not aware

of any case in the line of cases, and they are

quite diverse, as Your Honour will see, in which it
has been suggested that the jurisdiction is

available - - -

DAWSON J:  You see, I thought you were suggesting it was the

improvidence of it which was the crucial factor.

It cannot be that.

MR BENNETT: It is one of the factors, Your Honour. It is

not the only one. It is one of them.

TOOHEY J: That seems to cut across all the great religious

teachings of the last many thousands of years which
all favour extravagance of gift, not being too

cautious about what you give away.

MR BENNETT: Well, Your Honour, it may depend on the

circumstances. What the Chief Justice said was,

there was a difference between a gift to someone,

in relation to whom one's love was requited, so

that one had a man and a woman, or two people for
that matter, who were intending to live together,

devote their lives to each other - one can well

understand there, a gift from one to the other of

the whole of that one's fortune might well not be

improvident, because it is something which is going

to be available for the two of them and there is a

quid pro quo if one likes in the relationship

itself, but what made this gift improvident were

two things.

First, its size in proportion to his assets and secondly the fact that it was to someone who

did not, in any way, return his love; who regarded

him as something of a nuisance; who was obviously

Louth(2) 44 8/4/92

totally unimpressed with his infatuation - she
grudgingly admitted that she had read some of the

poems - I think at one stage she said she had read them, suggesting she had read all of them, but she

certainly had not treated them in the spirit in

which they were obviously written when one looks at

them. It was that that was the improvidence. It

was giving it to someone who did not return the

love and affection and it is important to realize

this was not a bribe-type case. This was not a

case -

DAWSON J:  If I may stop you there. You see, that would

apply to all the gifts, or do you stop and draw a

line at a certain money value?

MR BENNETT: No, Your Honour. It draws a line for two

reasons: with the other gifts there was a big

difference in money value; it did not have the

relationship to his assets that this one had.	The
improvidence just was not there in relation to small gifts. There was a small quid pro quo, I
suppose.	She was prepared to see him occasionally

to have coffee with him, to have evenings talking to him, and to give some of her company. A small

quid pro quo, I suppose, justifies gifts of a

certain size. In that sense, it did not have the

improvidence any more than a large gift to someone

who genuinely loved one would have the

improvidence, but here there was a large gift to

someone who did not have any relationship back.

DAWSON J: That was the unconscionability, the inadequacy of

the consideration.

MR BENNETT: That, combined with the deliberate

manipulation. There was always that element in all

these cases. One looks at the cases of the banker who says, "I'll prosecute your son unless you give

me a mortgage", or one looks at the cases of the

semi-inebriated elderly person. One looks at the

whole range of different cases and in all of them

there is a deliberate taking advantage. That is

what operates on the conscience of the defendant.
As I say, I am not aware - it may be arguable that

the cases might extend further - but I am not aware

of any case where it is extended to a situation

where there is nothing more than the passive

receipt on the part of the defendant.

DAWSON J: So, you would say in this case that apart from

the finding of her having manufactured a crisis, if

he had given her the house she would be entitled to

retain it?

MR BENNETT:  Subject to the fact that if that had been the

finding, I suppose the undue influence argument

Louth(2) 8/4/92

might have been pressed. It was thought to be

unnecessary because of the strength of the
unconscionable conduct on appeal, subject to that,

yes, Your Honour.

GAUDRON J: But, do you not have to say that there had been

a finding that she had done nothing to encourage

the giving of the gift rather than say, absent the

particular finding, that there was because, I

think, obviously, she had declined to borrow the

money from him to have the house, she had declined

to stay there as his tenant at a reduced rent, none

of these were satisfactory. On one view, quite

apart from the finding actually made by the

Chief Justice, there is evidence which supports a

finding in like terms.

MR BENNETT:  Yes. I took His Honour Justice Dawson's

question to assume the absence of those facts as

well. I took his question to assume a bare receipt

on her part without any conduct at all, without any

of the conversations, any of the manufacturing of
the crisis, any of the threat of suicide, any of

the rejection of the half-way suggestions that he

made, and, yes, that alone might be sufficient to

push it over the line. Any encouragement of him at

that stage might be sufficient to put it over the

line if she knows the relevant factors, but here,

of course, the case is very much stronger than that
for the other reasons.

McHUGH J: Well, maybe. Supposing she had said to him, "I'm going to leave here and marry Chris Mather and I'm going to live with him", and your client had said, "Don't do that, I'll buy this house for you", and

she said, "Oh, righto".	Now, could you set that
aside?

MR BENNETT:	The difficulty there - I am sorry to avoid answering Your Honour's question - is I need to
know how many of the other facts are being removed.
For example, one of the matters which is clear in
this case is that there was no element of a bribe.
It is not as if he was offering her the house in
the hope that she would change her mind and treat
him in a different way to the way she was treating
him.

McHUGH J:  He was in one situation. He was giving

consideration for it, was he not? He was hoping

that he would maintain the relationship with her,

that she might change her mind.

MR BENNETT: It was more than that, Your Honour. If

Your Honour goes to page 304, point 5 - this is a

passage my learned friend referred to at the

beginning of his submissions - at line 10,

Louth(2) 46 8/4/92

His Honour refers to the conversation - and this is

long before the house is transferred:

"Oh well, if you don't try and hassle me I

would probably let you sleep with me

occasionally but I don't want any commitment".

McHUGH J: Yes, but the passage at page 84 in his evidence -

he said it was a light-hearted - - -

MR BENNETT: That is exactly what I was about to take

Your Honour to. The point about that being a

light-hearted comment, not being something taken

seriously, is that this was not a case of a sexual

bribe. It was not a case of the house being

offered in order to induce her to behave in a

particular way towards him. One does not find any

suggestion of that in the evidence.

The question Your Honour puts to me assumes,

at least in a negative way, that type of factor

which is simply not this case. But if Your Honour

asks me the question in the abstract, it would be a

much harder case to argue than this one, it would

be a borderline case. The question is: would one

characterize that as unconscionable taking

advantage of the other person's infatuation?

If, for example, the hypothetical woman in

Your Honour's example did not really intend to

marry the person but was simply saying it in order

to try and extract property from the lovelorn

swain, I suppose that would be unconscionable

conduct.

DAWSON J:  What you really are saying is that any case of

emotional blackmail - and I think you may be saying

it is put so long as the stakes are high enough -

amounts to unconscionable conduct. That is opening

up a very big field, is it not?

MR BENNETT:  Your Honour, it is not if there is - perhaps

the best way of putting it is that there seems to

be an exclusion if the transaction is not

improvident.

DAWSON J: That is what I meant by the stakes are high

enough, provided - I do not know where you draw the

line.

MR BENNETT: If the stakes are low, it is not improvident,

Your Honour. If a single man takes a young lady to

dinner and incurs the cost of the dinner merely for the purpose of her company for the evening, that is not an improvident spending of money on his part.

The cost of the dinner is seen in his eyes to

Louth(2) 47 8/4/92

equate the benefit of company for the evening.

Similarly, small gifts - - -

DAWSON J:  What if he gives her a piece of jewellery?

MR BENNETT:  Then it becomes a question of degree. If it is

a $100 piece of jewellery, one might say one thing.

If it is a $10,000 piece of jewellery from a man

whose assets are not large, it would be something

else.

McHUGH J:	What about the lonely country farmer who gives the waitress in the nightclub a $1000 tip just
because she has spoken to him?

DAWSON J: It is a wholly mythical figure, I would have

thought.

MR BENNETT:  It may be a question of what her conduct is

which induces it and whether that is unconscionable

but, Your Honour, there is nothing surprising or

unusual about any principle of law, especially in

this area, being a question of degree. What one

always has to ask in all these cases is: does it

fit within - and the test laid by the Chief Justice

in Amadio is probably the best formulation of it

for our purposes. A person makes unconscientious use of a superior position or bargaining power to

the detriment of a person who suffers from some

special disability or is placed in a special

position of disadvantage.

The farmer who tips the waitress is not in

that position. The person who showers gifts on a

person of the opposite sex, or a friend of the same

sex whose friendship the person wishes to acquire

or maintain, is normally not in that position, but

when you reach a certain value and you add the

elements you have here, then the person is in that

position.	You then have to say, "Is it
unconscientious, was there an unconscientious use

made of the position", and that is what you have in

this case. One can hypothesize all sorts of

examples which fall short of that test but none of

the matters put to me, in my respectful submission,

by Your Honour Justice Dawson or Your Honour

Justice McHugh fall within the Chief Justice's form

of words, and it is really as simple as that.

BRENNAN J: Are you able to articulate in any way what is

meant by "unconscientious" in these circumstances?

Or "unconscionable"?

MR BENNETT: There is nothing new in the Chancellor's foot

being long, Your Honour. It is obviously a phrase

which there will be difficulties in defining in any

Louth(2) 48 8/4/92

way. I can give Your Honour the standard cliches

which appear in the judgments.

BRENNAN J:  No, what I was thinking is that you have got a

series of emotional situations. There might be

some which are born of love or besottedness; some

which are born out of sheer generosity. Is it

unconscionable for a person who, knowing the
potential donor is possessed of this particular

characteristic, whatever it may be, to play upon it

- truthfully, but to play upon it - in order to

secure the gift?

MR BENNETT:  Yes, it can be, Your Honour, if the playing

upon it is sufficient to attract the epithet

"unconscientious".	And may I just show Your Honour
how - - -

BRENNAN J:	I mean, take the situation of somebody who is utterly impoverished and there is the farmer down
from the country and the question is put, "How are
you getting on?" "I'm getting on very poorly
indeed. These are my sad situations." Money changes hands. Unconscientious?
MR BENNETT:	And the statements are true?
BRENNAN J:	The statements are true.
MR BENNETT:	Your Honour has not given me, in that example,

any special disability or special position of

disadvantage.

BRENNAN J: Only in terms of compassion. Here is one person

who needs compassion and another who feels

compassion.

MR BENNETT:  No, Your Honour, that would not fall within the

definition. But if one had - and I need to change

the facts slightly - a farmer who had an unusual

personal characteristic, namely that he could not

bear to see human suffering of any kind and was

prepared to do almost anything to alleviate it, and

that disability was so extreme as to be something
that was almost a neurosis, and the other person

knew of that and behaved in exactly the way

Your Honour has suggested then, of course, it might

be on the other side of the line. But the example

Your Honour puts to me falls short because it is

not some special disability or special position of

disadvantage.

TOOHEY J: Putting it that way, Mr Bennett, do you not

measure the disadvantage by the improvidence?	I
mean, by the adequacy of the bargain? I can
understand you saying that improvidence is a

relevant consideration, but you seem to be coming

Louth(2) 49 8/4/92

fairly close to saying that that is how you measure

unconscionability, by the value of whatever is

received in return for the gift.

MR BENNETT:  It is certainly one of the factors,

Your Honour. If full value is received for the

gift clearly there has been no unconscientious

bargain, and that value need not be in moneys

worth.

TOOHEY J: It would not be right, would it, to say that that

is the criterion by which you measure

unconscionability.

MR BENNETT: It is not the criterion, Your Honour, it is one

factor.

TOOHEY J:  Not in any exclusive sense, at any rate.

MR BENNETT: It is one factor, Your Honour, it is one

factor. But the cases suggest, and I take

Your Honours to Amadio first - - -

McHUGH J:  You have cases where full value of unconscionable

behaviour, in this context, where full value is

given, do you not? Supposing I have got a painting

which has wonderful sentimental value for me, you

were after it, but you have got some hold over me,

as a result, I transfer it to you for maybe the

market price?

MR BENNETT:  Yes. What that illustrates, Your Honour, is

that providence is not, necessarily, measured at

their market value, and I think that is implicit in

the examples we were discussing earlier: where a

person gives a house to someone who the person

intends to live with for the rest of the person's

life. Now, that is clearly a case of, in a

technical legal sense, improvidence, but it would

not be regarded as improvidence for this purpose in

the normal situation, because there is, what would

be regarded as a reasonable return for it.

I will not take Your Honours to large slabs of

Amadio but there are some short passages I should

remind Your Honours of. In the judgment of

Your Honour the Chief Justice - and the point I am

endeavouring to make by taking Your Honours to

these passages is to show the breadth of the
doctrine and, in particular, the fact that it is

not something confined to closed categories.

The classic passage beginning at page 461

point 2:

Historically, courts have exercised

jurisdictions to set aside contracts and other

Louth(2) 50 8/4/92

dealings on a variety of equitable grounds.

They include fraud, misrepresentation, breach

of fiduciary duty, undue influence and

unconscionable conduct. In one sense they all

constitute species of unconscionable conduct

on the part of a party who stands to receive a

benefit under a transaction which, in the eye

of equity, cannot be enforced because to do so

would be inconsistent with equity and good

conscience. But relief on the ground of

ttunconscionable conducttt is usually -

not always -

taken to refer to the class of case in which a

party makes unconscientious use of his

superior position or bargaining power to the

detriment of a party who suffers from some

special disability or is placed in some

special situation of disadvantage, e.g., a

catching bargain with an expectant heir -

and just stopping there, there is no particular

personal disability of an expectant heir. The

problem with the expectant heir is that he is in a

weak bargaining position, he has something of very

great value to him, potentially, which the

moneylender is going to treat as being of very

little value because of its contingent nature and,

therefore, he is likely to suffer a disadvantageous

transaction because of want of bargaining power,

but it is not because all expectant heirs are

assumed to be vapid young men who have no idea what

they are doing -

or an unfair contract made by taking advantage

of a person who is seriously affected by

intoxicating drink.

Then there is reference to undue influence and the

difference between them.

Then, over the page, at page 462, after

referring to the enumerations that Your Honours

have been taken to of the two Justices in Blomley

v Ryan, His Honour says at point 4:

It is not to be thought that relief will

be granted only in the particular situations

mentioned by their Honours. It is made plain

enough, especially by Fullagar J., that the

situations mentioned are no more than

particular exemplifications of an underlying

general principle which may be invoked

whenever one party by reason of some condition

of circumstance is placed at a special

disadvantage vis-a-vis another and unfair or

Louth(2) 51 8/4/92

unconscientious advantage is then taken of the

opportunity thereby created. I qualify the

word "disadvantage" by the adjective "special"

in order to disavow any suggestion that the

principle applies whenever there is some

difference in the bargaining power of the

parties and in order to emphasize that the

disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his

own best interests, when the other party knows

or ought to know of the existence.

Now, the word "seriously" is the important

word in that passage. The word "special", of

course, has a variety of meanings from a bus that

does not stop, to leave which is harder to get, to

discount goods at a supermarket. But the normal meaning of the word "special" is something which

takes it out of the ordinary, something which is

peculiar to the particular case, rather like the

common law usage of the action on the special case,

as opposed to the more generally established

traditional causes of action.	And that is really
what one is talking about here.	The facts have to

be, if they are not within one of these categories,

in perhaps some sui generis category, some unusual

category which makes them special, but which are

serious, where it seriously affects the ability of

the innocent party. Special in that sense, I

suppose, is rather like special in special leave.

It is an adjective which goes to intensity rather

than to any particular characteristic.

Your Honour Justice Deane dealt with the matter at page 474 where, in the middle of page,

Your Honour said:

The equitable principles relating to

relief against unconscionable dealing and the

principles relating to undue influence are
closely related.	The two doctrines are,
however, distinct.	Undue influence, like

common law duress, looks to the quality of the

consent or assent of the weaker party.

Unconscionable dealing looks to the conduct of

the stronger party in attempting to enforce,

or retain the benefit of, a dealing with a

person under a special disability in

circumstances where it is not consistent with

equity or good conscience that he should do

so. The adverse circumstances which may

constitute a special disability for the

purposes of the principles relating to relief

against unconscionable dealing may take a wide

variety of forms -

Louth(2) 52 8/4/92

and I am not susceptible to being comprehensively

catalogued, that should be.	Then there is the
Blomley v Ryan list and so on.

Your Honour Justice Dawson, although

dissenting in that case, did not state the

principle significantly differently. The passage

in Your Honour's judgment is at page 489, and in

the full paragraph on that page commencing at

point 2, Your Honour said this:

The respondents sought to invoke the

equitable jurisdiction which is raised
"whenever one party to a transaction is at a
special disadvantage in dealing with the other
party because illness, ignorance,

inexperience, impaired faculties, financial

need or other circumstances affect his ability

to conserve his own interests -

We stress the words "or other circumstances" and

note that that list is not a list which can be

construed ejusdem generis. There is no genus.

and the other party unconscientiously takes

advantage of the opportunity thus placed in

his hands": Blomley v Ryan.

Your Honour refers to Justice Fullagar and his

additional ones of sex, lack of assistance and so

on.	Then Your Honour adds -
unfamiliarity with the English language. What
is necessary for the application of the
principle is exploitation by one party of another's position of disadvantage in such a
manner that the former could not in good
conscience retain the benefit of the bargain.
In my respectful submission, the principles
thus laid down are the ones which must be applied.

Now I have dealt in paragraph (b) on pages 2 to 3

of the submissions with the word "special" and I

have referred to the passages in Amadio and Blomley

v Ryan. The reference in Blomley v Ryan is the

common characteristic seems to be that they have

the effect of placing one party at a serious

disadvantage vis-a-vis the other.

There are two other decisions I might briefly

remind Your Honours of. I need to hand these up.

The first is Smith v Kay, VII HLC, 750 and
volume 11 of the reprint, page 299 and the other

one I think Your Honours have on the list, it is

Slator v Nolan, LR 11 IR Eq 367 - I am sorry, I

thought they were collated in individual cases -

they had been already collated for Your Honours, I

Louth(2) 53 8/4/92

am sorry. Your Honour, the passages in Smith v

Kay, the first is at page 304 of the reprint, which

Your Honours now have and the long paragraph

starting at point 2 on that page, in the speech of the Lord Chancellor, Lord Chelmsford, his Lordship

says this:

After this long examination of the

circumstances of this case, it is almost

unnecessary for me to say, that in my judgment

the fraud which is charged upon the Appellant

is completely established, and that he must

suffer all the consequences of having chosen

to unite with others in a scheme of deception

which, perhaps, it was unnecessary for him to

resort to in order to obtain the confirmation

of his transactions. If this had been nothing

more than the case of a young man completely

under the control and influence of another

person, and, acting under that influence,

being induced to execute securities for bills

which he had accepted during his minority,
without any independent legal advice or

assistance to enable him to understand and

learn his true position, I should have thought

it would be incumbent upon those who

endeavoured to avail themselves of those

securities, to give the clearest and most

satisfactory evidence of fair dealing -

et cetera.

But the present case goes far beyond

that .... he has been prevailed upon to ratify

them, not merely by a concealment of the

truth, but by a planned and concerted
misrepresentation of the circumstances,
contrived and determined upon for the very
purpose of entrapping him into the execution

of these securities.

And he goes on to deal with that aspect and affirms

it. So a quasi fraud is sufficient to come within the principle and at page 307 of the reprint at the

bottom of the page - - -

BRENNAN J:	What do you mean by quasi fraud?
MR BENNETT:	Your Honour, one of the elements of common law

deceit is a misrepresentation of fact. Most of the

cases where phrases like "smacks of fraud" or

"equitable fraud" are used are cases which would

constitute common law fraud but for the fact that

the representation made is of a more general and

non-factual nature. And this is perhaps a very

good example. If this case had been a common law

deceit case and the plaintiff had simply said, "You

Louth(2) 54 8/4/92

told me that you were facing immediate eviction and
that you were contemplating suicide as a result",

there might have been difficulties in finding -
bearing in mind the onus of fraud and the

difficulties in establishing it - a representation of fact. But one has conduct which is clearly, in

the equitable sense of the word, fraudulent, and it

is that which is meant.

BRENNAN J: Could you identify precisely what you mean as

conduct falling within this description which falls

outside the description of common law fraud?

MR BENNETT:  The general answer is "unconscionable conduct";

the specific answer to Your Honour's question is

conduct - what we are endeavouring to show is that

conduct which is very close to fraud may fall

within the description.

BRENNAN J: But close only in terms of the subject-matter to

which a representation relates?

MR BENNETT: That is usually the element which is missing.

That is usually the reason it is not common law

fraud.

BRENNAN J:  I do not see that as having any application in

this case, unless you can point it out to me.

MR BENNETT: Well, Your Honour, if one accepts the

Chief Justice's findings for the moment and finds

that there was a deliberate manipulation and

manufacturing of an atmosphere of crisis, general
statements about urgency of a need to go - perhaps

not in terms of "I have been told I have to leave

next week", but giving that impression - and

general indications that suicide might be the

solution, one would be hard put to establish common

law fraud, but one has no trouble in establishing,

on those facts, the sort of quasi-fraud, if that is

the word, which invokes the doctrine of
unconscionable dealing.	And really, I am referring

to this case to show that it is that sort of

quasi-fraudulent conduct which has been held on
other occasions to fall within this umbrella.

The other passage is a very short one. It is at the bottom of page 307, the last paragraph:

In my opinion, although this bill is

framed upon the ground of this supposed fraud,

the circumstances of the case as now proved

make it abundantly clear that this fraud was

totally immaterial in order to entitle the

Plaintiff to set aside this bond, upon the

ordinary principle of the Court, which

protects an infant, or any other person, who

Louth(2) 55 8/4/92

is, from the relations which have subsisted

between him and another person, under the

influence, as it is called, of that other.

Now, that is very broad, "No particular

relationship except the person is under the
influence of the other", as broad as that.

My Lords, there is, I take it, no branch of the jurisdiction of the Court of Chancery

which it is more ready to exercise than that

which protects infants and persons in a

situation of dependance, as it were, upon

others, from being imposed upon by those upon

whom they are so dependant. The familiar

cases of the influence of a parent over his
child, of a guardian over his ward, of an

attorney over his client, are but instances.

The principle is not confined to those cases,

as was well stated by Lord Eldon, in the case

of Gibson v Jeyes, in which he says it is "the

great rule applying to trustees, attornies, or

any one else." Now, what does "any one else

mean? It is contended that it applies only to

persons who stand in what is called a

fiduciary relation. I believe, if the

principle is examined, it will be found most

frequently applied in such cases, for this simple reason, that the fiduciary relation

gives a power of influence: but I could

suggest fifty cases of fiduciary relation

where the principle will not apply at all. If

a man makes me trustee of an estate, to pay

certain securities, and then ultimately to

stand possessed of it for him, we deal with

one another in purchase, or in any other way,

perfectly at arm's length. I have no

influence over him because I am his trustee.

it is only a particular sort of trusteeship -

et cetera.	And then he goes on to discuss the
facts.

So the proposition is a very general one and

the courts have again and again referred to the

fact that one cannot categorize it. Slator v Nolan

is the other one which perhaps puts it more clearly
than many of the English and Australian cases,

although none of them suggest anything different,

just a particularly clear exposition of it. Slator

v Nolan, Your Honours, have;	it
is (1876) 11 I Ch R, at page 367.	Do Your Honours
have that?

MASON CJ: Yes.

Louth(2) 56 8/4/92

MR BENNETT: 

The passage is at page 386 in the judgment of

the Master of the Rolls, I assume, where,
two-thirds of the way down the page His Lordship

says this:

Now, before I review the precise

circumstances under which the deed was taken

from Slator, it is right that I should clearly

indicate what is my view of the law applicable

to such matters as that before me. It is an

idle thing to suppose that the relation of

trustee and cestui que trust, or guardian and

ward, or attorney and client, or some other
confidential relation, must exist to entitle a

man to get aid in this Court in setting aside

an unconscionable transaction. I take the law

of the Court to be that if two persons - no

matter whether a confidential relation exists

between them or not - stand in such a relation

to each other that one can take an undue

advantage of the other, whether by reason of

distress or recklessness or wildness or want

of care, and where the facts show that one

party has taken undue advantage of the other,

by reason of the circumstances I have

mentioned - a transaction resting upon such

unconscionable dealing will not be allowed to

stand.

And, Your Honours, one can repeat that sort of statement in a greater or lesser degree in large

numbers of cases.

BRENNAN J: 

The problem is that the terms which are used are described such as "undue advantage", which raises

questions of the quality of the act. In this case

we have got two people who have known each other
over a long period. It is known that he has a

great affection for her which is an unrequited

affection, but they sit down, let us assume, and talk about the situation that she is in and she	tells him truthfully what the situation is. Let
that be assumed for the moment.	And she tells him

also of her great concern and worry about the

future for herself.  As a result of that, he offers

first one thing, then another, each of which she

finds unsatisfactory, and then finally the offer of the house. Where does one find unconscientiousness

in that, if that were the sole fact?

MR BENNETT:	I would have great difficulty, Your Honour. would ultimately be a question of degree but the	It
question would be: is that unconscionable, is that

unconscientious?	And many judges and many people
would no doubt say it was not.	But once she

crosses the line, once she takes a deliberate

advantage of it, by exaggerating, emphasizing

Louth(2) 57 8/4/92

matters which are not true, threatening suicide,

suggesting she is about to be evicted, matters of

that sort, then that line is clearly crossed.

Your Honour's example - - -

BRENNAN J:  Is it crossed by reason of an intention thereby

to secure an advantage for herself?

MR BENNETT: That would take it a long way towards it.

Whether it actually took it over is something which

I would have thought people might differ on,

Your Honour. There is no black and white answer I

can give to Your Honour's question. Your Honour

puts to me a grey case and says, "Which side of the
line does it fall on?", when the line is not a

bright line.

BRENNAN J:  Does it matter? Does the motive with which she

engages in the conversation affect the question of

whether it is unconscionable?

MR BENNETT:  Yes, Your Honour, clearly, very much so,

because if she has no motive in relation to it, it

would be very hard to find the elements which have

been referred to in the setting out of the cause of

action.

TOOHEY J:  Does it matter, Mr Bennett, pursuing

Justice Brennan's line of inquiry, whether what is said is true or not?

MR BENNETT:  Yes, Your Honour. It may not be decisive. A

true statement - first of all -

TOOHEY J: 

I am asking this expressly in relation to the

question of suicide. Let us say what she said
about her intention to take her own life she

genuinely meant.

MR BENNETT: 

Your Honour, that is contrary to what we would

say the findings are and the inference that should

be drawn, but even then there might be a problem

there because -

DEANE J: Is that right? Your client swore in the box that

he still believed she intended it and it was

genuine.

MR BENNETT:  Yes. Your Honour, that almost raises another

question. If I walk into a bank and point a gun at

my head and say to the teller, "I'll kill myself

unless you hand over the money", it may not be
common law duress because the threat is not to the
victim or member of the victim's family, but it may
well fall within one or other of the heads of

unconscionable conduct if the teller hands over the

money.

Louth(2) 58 8/4/92

Even if I genuinely intend to kill myself,

just because I have threatened to commit a crime

and it is a crime he does not want me to commit and

money is paid, in that unlikely scenario one may

fall within the principle. So that the threat of

suicide is perhaps in a different category because

it is an unlawful act and it is an act which

obviously would cause him very great distress.

TOOHEY J: Let us tone it down a bit. It is not a threat of

suicide; it is a threat to go away, move to

another State.

MR BENNETT:  It would depend there perhaps on the

genuineness of the threat and the extent to which

it was likely to influence him. One could imagine

a situation where, knowing that he is totally infatuated and that it is not requited at all,

knowing that he would do anything to prevent her

moving to another State, that if she said, "I will
move to another State unless you pay me the

money" - - -

TOOHEY J: Well, not so much "unless you pay me the money",

but "unless I have somewhere to live and there is

no way I can afford to stay here", the implication

no doubt being that "unless you provide the money I

cannot secure accommodation".

MR BENNETT:  If she genuinely intended in the absence of

having a roof over her head to go to the other

State which I take it is what Your Honour is

putting to me - - -

TOOHEY J: Yes.

MR BENNETT:  - - - so the representation to that extent is

true and genuine, so there is a genuine alternative

that either he provides the money or she goes to

another State, and she is not doing it for the

purpose of obtaining the money from him or the

house from him so much as for the purpose of

putting before him the precise position, it might

be hard to say it-was unconscionable, although one

would not need to alter the facts very much to push

it over the line. But all these examples,

Your Honour - - -

TOOHEY J:  No, but they are not examples so much, and I was

about to add this, that at least from my part I am

not offering them by way of illustrations or

examples because you could go on offering

illustrations on one side of the line or the other,

but as we are trying to find what the principle

is - I mean the question of genuineness or

non-genuineness is not so much by way of example,

Louth(2) 59 8/4/92

but to ask whether that is an essential ingredient

of unconscionability or not.

MR BENNETT: Well, Your Honour, the answer really, I would

submit, is this: that in the 200 years or more in

which this jurisdiction has existed the courts have

refrained from doing the very thing Your Honours

are asking me to do. And they have deliberately

refrained from doing so and, in effect, said that

they were refraining from doing so. They have used

very general language which enables a judge to test

a result against a word which has meaning, the word

"unconscionable". It is no different really to a

word like "reasonable", or - - -

McHUGH J:	Has the word "unconscionable" got meaning?
MR BENNETT:	Yes, Your Honour, yes.
McHUGH J:	How do you find a meaning?
MR BENNETT:	Your Honour, it is a subjective meaning which

is different to different people. It is something

which offends the conscience, something which a

reasonable person of normal moral sensibilities

would regard as wrong.

One is always going to come back to synonyms,

as one is with "reasonable" or "negligent" or any

of the other words which the law uses daily, and a

jury is asked, "Was it reasonable for the defendant

to act in this way?", in a motor accident case.

The jury comes back and says, "Please, Your Honour,

what does 'reasonable' mean?", all they are going

to get is synonyms. It is the same problem. And

one cannot pin it down by saying, "Well, if one

takes this specific element away and hypothesizes

this particular fact, is that or is that not

unconscionable?". In our respectful submission,

one cannot answer it that way.

The statement made - the way the principle is

put by the Chief Justice in Amadio is, in my

respectful submission, capable of application to

any set of facts so long as one is prepared to

concede that the application has a degree of

subjectivity about it and - - -

McHUGH J: It is a category of indeterminate reference?

Louth(2) 60 8/4/92

MR BENNETT: Precisely, Your Honour, precisely, a category

not unknown to the law.	I see, Your Honours, it is
twenty past four.

MASON CJ: Yes, very well, Mr Bennett, we will adjourn and

resume at 10.15 tomorrow.

AT 4.19 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 9 APRIL 1992

Louth(2) 61 8/4/92